Millions of people have their own business. In fact, a recent Hartford survey has indicated that roughly 25 percent of all Americans have a side business, which is something that they do in addition to their full-time job. That is approximately 57 million people. However, many of those individuals do not have business insurance to protect their ventures or themselves. They often make the mistake of thinking that they do not need protection, or their business is too small or too safe to need it.
What they do not realize is that having business insurance is vital for a business of any size. Unfortunately, many people do not understand the significance of having coverage until they actually need it.
Why Do Business Owners Ignore Insurance?
Businesses often simply overlook that they should have insurance. Someone who is trying to run a company, especially a new venture, may not think about the added cost of coverage until they work out the kinks in their daily operation.
Others simply have too many other expenses that they do not want to invest in insurance when there is a low risk that they will need it anyway. Some business owners may only purchase business insurance when the law requires it, such as workers’ compensation coverage or malpractice insurance.
While all of these are common rationales for avoiding the purchase of expensive business insurance, none of them are good reasons to ignore your coverage needs.
Why Is Business Insurance Important?
Insurance protects businesses of all sizes from unforeseen risk. Although you may think that you are saving money by not purchasing insurance, you could be costing yourself more in the long run.
Many people fail to realize the risk associated with their business.
For example, if you operate out of a physical location, there is always the chance that someone will slip and fall on your property. If that happens and you have business insurance, then your insurance company will hire someone to defend you and address the claim for you.
If you do not have insurance, you may have to pay for your own attorney and the average slip and fall claim costs roughly $20,000 to settle. If you do not have that kind of money available, it could mean serious problems for your company. If you have significant assets or investments that your company holds, all of that equity and hard work could be at risk.
Keeping your business insured is not only good for you and your company, but it is also a good idea for your employees. You may have staff and workers that depend on you and your company to provide for them – some of them may even be like family to you. Carrying the right insurance will help you protect those people as well.
Having the right insurance coverage also provides peace of mind. There are many factors outside of your control that affect your business and having insurance to deal with these issues takes that worry off your plate.
It also significantly reduces your business risk, giving your company a better chance to thrive for years to come.
Types Of Business Insurance To Consider
The type of business that you have will generally dictate what kind of insurance coverage you need. Some of the most common examples of business insurance include:
- Business owners’ policy. This is one of the most basic types of business insurance. It covers some of the most common risk areas for small business owners. It includes both general liability and commercial property protection. General liability will protect you from lawsuits while commercial property will address damage to your physical location.
- Business interruption insurance. This type of coverage will help you reduce lost income if you can no longer run your business for a short time, often after a natural disaster.
- Errors and omissions or professional liability insurance. Professional service businesses need this type of coverage to address the potential for mistakes in providing services for your clients.
- Cyber insurance. This relatively new insurance product will address issues that may come up because of a cyberattack on your company. The risk of this type of loss is higher now than ever before, and the effects can be significant. A study done by Kaspersky in 2016 indicated that the average cost of a data breach for a small to a medium-sized company was $86,000.
At HJR Global, we want to help businesses grow and expand, and protecting a business is a vital part of that process. Learn more by reviewing our resources on how to manage your business. Contact us today to discover how we can help your company thrive.
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