Your small business may be operating on thin margins, but one expense you should not skimp on is insurance. Beyond receiving peace of mind, having the right kind of coverage is an essential part of a smart, long-term strategy to keep your business running smoothly and to recover swiftly in the event of a fire, disaster, cyberattack or lawsuit.

Here are five reasons to get the right kind of coverage:

Get 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 and could wipe out any savings you may have accumulated.

Don’t lose your livelihood because you didn’t have the right coverage. Get the basics:

• A commercial 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, furniture, supplies and inventory. It also covers damages to the personal property of others.

Protect your personal assets

Depending on your business structure, the stakes could be very high for you and your family without the proper commercial liability coverage.

Avoid devastating losses from a lawsuit by purchasing commercial liability insurance. Liability insurance can help safeguard your assets if you are sued and must pay a settlement or judgment for slander, copyright infringement, 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 underlying policy covers and what you’d have to pay out of pocket.

Continuation of business

If there’s a disaster, fire or cyberattack that shuts down your business, it may take time to restore your operations and start earning income again. Meanwhile, payroll, utilities, leases and other expenses will add up quickly. Business interruption coverage helps supply the funds until you’re rolling again.

Meet insurance requirements

Certain types of insurance coverage are required. For example, nearly every state mandates businesses with employees provide workers’ compensation insurance, and many states require unemployment, disability and liability insurance. 

Your customers, landlord or bank may also require insurance in order to do business, lease space or obtain a line of credit. Professionals, including engineers, architects, attorneys and doctors, may need to purchase an errors and omissions policy.

Build your reputation

Having insurance can help you earn trust with potential customers, employees, partners and vendors. People want to know there’s a solution in case of an issue — having insurance shows that you care about your business and all the people it affects.

Of course, we often don’t know when things will go wrong, but it’s helpful to be prepared for when problems do happen. An independent insurance agent can help you figure out how to protect your business and personal assets from workplace mishaps. It never hurts to learn more about managing your risks and finding solutions that help protect your company.

Connect with a Westfield agent to find out more about small business insurance coverage.