When reviewing a checklist of things your small business needs to open on the right foot, you may be surprised to see how many types of insurance coverage are recommended. It can be tempting to skimp on your policies to save some of the startup costs, but cutting back in the wrong areas can leave you open to legal action from the government, employees or customers. The four primary reasons to ensure that you have the right policy coverage are to protect your company, yourself, your employees and your customers.
Protect Your Company
The number one reason why your company needs some insurance is because it is the law to have a minimum amount of coverage for your company, property and employees. You can take it further and find more detailed coverage for your business and industry type to protect your company from legal action unique to those factors. For instance, if you run an online clothing retail shop, you will want to look for insurance for clothing stores, which is more likely to have property damage protection applicable to your products.
The longer you are in business, the greater the likelihood that you will be sued for something and if found liable, you could have to pay more than your business can spare while staying open. Without proper insurance coverage, you will have to go through the legal and claims process yourself, resulting in less time focusing on your company’s core competencies. If accidents happen and your company is sued, having good insurance coverage means that you can let your agent handle the paperwork and negotiations.
You have health insurance to help cover medical costs when you get sick, home insurance to help cover significant repair costs from storms, and you need business insurance to help cover the costs of accidents. This is especially helpful in covering the damages from a lawsuit or medical claim. You could lose more than just your company without the proper liability coverage; if you have taken out loans with personal property as collateral, a lawsuit can cause you to default on repayment, and your finances and reputation can take a significant hit.
Protect Your Employees
Most business owners will consider workers’ compensation insurance when considering how policies protect their employees, but there are other protections. For instance, disaster insurance can cover wages while your business repairs the damage. Professional liability coverage will protect your employees from paying liability for damages caused by mistakes or misunderstandings. When reviewing the risks and coverage options with your agent, remember that you are an employee of your business and will need these protections as well. Part of your employer paperwork will be a contract with your employees saying which things the company is liable for and which ones the employee is. For instance, food service employees need to wear proper footwear to be protected from damage from slip-and-fall accidents while on the job. Ensuring that your policy covers your liabilities in those contracts and that your employees understand their responsibilities is essential.
Protect Your Customers
Your business insurance policies can also help protect your customers from paying damages, lengthy lawsuits, etc. This is especially true if you rent out products and equipment. Any accidental damage caused by rentals could be considered the liability of you, your customer or the individual using it. With a good insurance policy, your customer can purchase coverage from you along with the rental contract. Even if you only have the basic range recommended by your agent, you will still be protecting your customers from having to either pay for damages themselves or file a lawsuit instead of a claim.
Having basic insurance for your company is the law, but having a well-fitted policy tailored to your business’s unique risks can save your company, yourself, your employees and your customers time and money. Your insurance agent can help you determine the risks and coverage you need to keep your business growing and succeeding.