We have seen a number of entrepreneurs make it big by exploring new avenues recently, and their success has encouraged many others to try and start something new. While the chances of success cannot be determined in advance, there are definitely precautions which every budding entrepreneur should take to safeguard the future of their business. Among those precautions, insurance is by far the most important one and in case you have not yet insured your company because you think it’s too small to require insurance right now, here are six reasons as to why small business insurance shouldn’t be ignored.
Legal Binding
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As stated by the Small Business Association (SBA) in America, if you have even a single employee working under you, you need to have insurance to both protect yourself and for providing compensation to the employees in the event of an accident at work. The exact particulars will vary from state to state, but you can expect policies for worker’s compensation and disability checks to be part of the package. On failing to comply with the state’s insurance laws in the event of an accident, you will be susceptible to fines, cancellation of your license, and even jail time in some situations.
Credibility
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If you are thinking that you are in a line of business that has little to no chance of seeing accidents, you are wrong because there has been a number of downright strange lawsuits in the past and some of them have even been awarded, much to everyone’s bewilderment! That fact aside, having small business insurance gives you credibility. More people would want to work with you because they would feel reassured by the fact that just in case some damage is caused to their property by the actions of your employees (or you), they are legally entitled to compensation, which your insurance will pay for.
Protection for Both Parties
Insurance protects both employees and employers, so it’s a win-win situation really. If someone gets hurt on the job while working for you, you should take care of them financially as it’s both a legal and moral obligation, but if you don’t have small business insurance, you might not be able to compensate them adequately, despite having the will to do so. This could and most probably would lead to the employee/employees suing you, and that could potentially spell doom for the small business that you have worked so hard to build.
Insurance vs. God!
Insurance: What exactly constitutes an “Act of God”?
Your business insurance can literally protect your company against “Acts of God,” which is a legal term used to describe natural calamities such as heavy rain, floods, storms, earthquakes, lightning, wildfire, etc. What this means is that if anything happens to your establishment or employees due to an Act of God, you would be compensated adequately for that loss. There are peril-specific policies and all-risk policies in business insurance and, as you can guess, the latter protects against every natural disaster while the former will specify the covered Acts of God in the agreement.
Key Person Insurance
Whether it’s you, your partner, or just a superb employee that you have working for you, it is possible that an accident, an illness, or just an unavoidable situation might take him/her out of the picture without prior notice and for a long time, if not permanently. It is possible to insure such a human asset so that in his/her absence, the company doesn’t suffer from a major setback. Such insurances generally cover death or disability and it is a common practice when you have a very important person in the company who’s absence could debilitate the entire business.
Because It’s Small
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One of the major causes as to why a lot of young businesses do not have insurance is because they think that they are way too small for getting insurance. Ironically, that is precisely why small businesses need protection even more. If Apple was sued by an employee with just cause and they had to pay them 10 million dollars to reach a settlement outside of court, they would do it in a heartbeat and not even feel it, but that’s because Apple is almost a trillion-dollar company. On the other hand, a small business which is trying to break even or has just done so will literally be ruined if they had to pay a million dollars they don’t have after losing a lawsuit. Insurance is necessary for small businesses, even more than the big ones because they can’t afford to not have it.
Before you sign up for anything though, do make sure that you have gone through all the details of your insurance policy thoroughly first. There is no point in paying for coverage you don’t need, so customizable options are a good sign as it will let you shave off a few dollars from your premium amount.