New businesses, especially SMEs run on a low budget from the outset, and they need to cut down on any unnecessary expense. Unfortunately many business owners plan to achieve this by disregarding business insurance. While business insurance is an additional cost, avoiding it puts you at a greater financial risk in the long run. The following are some reasons why all business owners should get insurance:
Protection Against Natural Hazards
Natural disasters like flooding or thunderstorms can devastate your business. However, if your business is covered by insurance against natural disasters, then a temporary closure is all that you will need to face.
Protection Against Theft
Replacement insurance protects a business in the event equipment is stolen, replacing the missing items and paying for repairs from damage caused by the invasion. Remember that your new business is a greater target for thieves since all the equipment is brand new.
What happens when a customer falls over in your store, or when your business car is involved in an accident? This could result in severe lawsuits against your business, and handling them involves a lot of money. Different forms of liability coverage also protect against accidents and injuries arising from a faulty product, or malpractice in a company that provides services.
Insurance Helps in Obtaining Finance
If you want to apply for a loan or find investors, being able to show that your businesses is properly insured can go a long way towards convincing lenders and investors. They need to make sure their money is safe, and will likely be unwilling to do business with anyone who doesn’t have the right coverage.
Along similar lines, if you want to conduct transactions with other businesses, you will find that it’s much easier with insurance coverage. In short, lenders, investors, and clients prefer to work with businesses that will not be ruined by sudden damage or loss.
The Legal Factor
While discussing the importance of business insurance, let us not forget that purchasing it is legally binding in certain cases. For instance, if your business has employees, you must have workers’ compensation coverage. Failure to do so can result in the company facing penalties, and you will be required to pay for injuries incurred by workers on the job from your own pocket.
So, as stated before, while monthly premiums maybe be additional expenses, insurance can help you avoid long term losses (and even closure) arising from unforeseen circumstances.