Some business owners believe that business insurance is something they can postpone until their business is successful. However, there are many unforeseen obstacles along the road to success, and business insurance is one of the best ways around these blocks. Successful investment bankers such as Warren Stephens understand that risk management and other business insurance products can help your business be fully protected.
In most states, businesses are required to have some types of insurance such as worker’s compensation coverage and disability insurance if the company has employees. Even in states where these products are not required by law, many businesses have coverage. The best way to get the right coverage for your business is to talk to a reputable insurance agent or broker and have your business assessed.
Unforeseen Circumstances that can Hinder Your Business
Liability insurance protects you in the event one of your customers slips and falls while they are on your property. It also covers any losses if your product is defective and harms a customer, or if one of your employees damages someone’s property while performing their duties, even if it is unintentional. For example, if a plumber is called to fix a leaking pipe, and it bursts, through no fault of the plumber, and ruins the wall-to-wall carpeting in a room or several rooms, someone has to pay for new carpeting, and it won’t be the homeowner. Any of these circumstances could financially ruin your business if you are not covered by liability insurance.
Catastrophe such as fire, flood, hurricane or tornado could put you out of business in an afternoon if you’re not covered for these types of losses. Business interruption insurance guarantees a continued cash flow for the time it takes to recover from a natural disaster.
Protection against theft is another insurance product that can save your business. Burglars may know when a company has new computers, office furniture and other expensive equipment. Even if your business is relatively small, losing all of the essential equipment needed to run your business could force you to shut down.
The sole proprietor of a business is considered one with his or her business. If the owner is in a car accident and unable to work for some time, it will be considered doubtful that they can profitably run their business. This is true even if the cause of the financial loss was in no way connected to the business. For example, if a guest in your home trips over the hose in your backyard and requires $30,000 worth of medical expenses, the guest can sue you for the money, and if you can’t pay, can force you to sell your business.
Risk management insurance covers many perils a company can face, both economic and infrastructure-based. A risk management insurance provider will learn the corporate structure and assess possible risks that are associated with the company’s functioning. The threats are identified, and the insurance provider will assess the likelihood of these threats occurring. The resources of the company that can be used to mitigate these occurrences will be taken into consideration, and a percentage determined for the amount of insurance needed. For example, if the headquarters of a company is located in a known hurricane corridor, the insurance provider will make assumptions on the different possible levels of damage to determine exact figures for a damage estimate.
Business insurance is important for public and private enterprises, both non-profit and for-profit, to flourish. Insurance mitigates the possible losses triggered by an unwanted or unexpected event keeping the overall finances of the company healthy including during a downturn in the economy. At the very least, a small startup should get personal liability insurance, so if there is an accident, it won’t cost everything the owner worked so hard to achieve.