Beyond Peace of Mind: Why Small Business Insurance Is a Smart Bet
By: Vanessa McGrady
Entrepreneurs sometimes need to operate on a shoestring budget, but one of the best investments a small-business owner can make is the correct insurance. Beyond peace of mind, having the right kind of coverage is an essential part of a smart, long-term strategy—especially because a full 25 percent of small businesses don't reopen after a disaster.
Here are five reasons to get the right kind of coverage.
1. Peace of Mind
If you don't have proper coverage, one event—such as a car accident, fire, theft or flood—could completely destroy all the work you've done to grow your company decimate any savings you may have accumulated.
Don't lose your livelihood because you didn't have the right coverage. Get the basics:
Auto policy is essential if you lease or own any vehicles for work, or if your employees use their personal vehicle for work-related activities.
Property insurance is a must to replace or repair buildings (and the furniture, supplies and inventory within) and, the personal property of others.
2. Protect Your Personal Assets
Depending on your business structure, the stakes could be very high for you and your family without the proper liability coverage.
Don't put yourself in harm's way and avoid devastating losses in a lawsuit. Liability insurance can help safeguard your assets in the event you are on the hook for settlements, judgments, slander, injuries and medical expenses, faulty products, and malpractice or errors.
You'll also want to ask your agent about an umbrella policy that offers extended coverage (in the neighborhood of $1 million to $5 million) in case there's a gap in what your policy covers and what you'd have to pay out of pocket.
Be sure to ask your agent how these insurance policies can help.
3. Continuation of Business
If there's a disaster, crime, or even a hacking that renders you unable to do business, you might need time to ramp up again before you can get that cash coming back in. Meanwhile, payroll, utilities, leases and other expenses will add up quickly. Business interruption coverage helps supply the funds until you're rolling again.
4. Meet Government Requirements
Some contracts with some companies, states and the federal government require certain coverage. For example, as the Small Business Administration points out, any business with employees must have workers' compensation, unemployment and disability insurance. Other entities may require an error and omissions policy as an important condition for eligibility.
5. Build Your Reputation
You can't buy people's trust—you have to earn it. But having insurance might help potential customers, employees, partners, vendors and clients choose your business. People want to know there's a solution in case of an issue—and having insurance also shows that you care about your business and all the people it affects.
Of course, we can rarely plan when things will go wrong—but it's helpful to understand that something might go wrong. An independent insurance agent can help figure this all out. It never hurts to learn more about how to anticipate your risks and find solutions that help protect your company.
Connect with us to talk to an insurance agent for small business to find out what would work best for you.
Vanessa McGrady is an award-winning journalist, social media strategist and communications professional. But wait, there’s more! She’s also been a playwright, actor, producer and voice-over artist. She can sing “Home on the Range” in Yiddish, which is apropos of nothing.
She is the author of Rock Needs River, a memoir.