Running a business comes with inherent risks: An employee could get injured on the job; a natural disaster could destroy property; or a client could file suit, alleging a contractual breach.

For those and other reasons, it is important to protect your assets, both business and personal. One of the best ways to do that is to make sure you and your business are adequately insured.

It’s the Law

The law requires businesses with employees to provide particular types of insurance: workers’ compensation, unemployment and disability, depending on the state where the business is located.

Failure to carry legally required coverage could result in fines, civil or criminal penalties, exclusion from public contracts and “cease and desist” orders,  all of which could cost you far more than the price of an insurance policy.

You Could Get Sued

We live in a litigious society. In the event of a lawsuit or liability claim, without insurance, your business could fold. One accident. One broken contract. One disgruntled employee, and it’s over. Even if you win the suit, you could go out of business due to the cost of legal defense.  

Rather than worry about what could happen, liability insurance can give you peace of mind, enabling you to concentrate on what truly matters, running a successful business.

Keeps Your Business Up and Running

What happens to your business in the event of a natural disaster, such as an earthquake or flood? P&C insurance covers loss of property — buildings, equipment, etc. But what about the money you lose during the time your business is closed?

That’s where Business Owners Insurance (otherwise known as BOP) plays a critical role. It can help a business survive a serious disaster by protecting against loss of income.

The way it works is that the insurer pays you the income your company would have made while it was out of action (assuming it’s due to a covered loss). BOP also compensates for normal operation expenses (e.g., rent and utilities) that you would have otherwise incurred during that time.

Contracts May Require It

When it comes to contracts and insurance, several variables come into play:

• If you rent or lease your business facility, you may need to carry insurance, as the landlord’s policy may not cover it.
• If you borrow money to finance buildings, equipment or operations, the loan agreement will likely contain an insurance requirement.
• Client contracts may specify that you carry insurance in the event things don’t go as planned.
• Add language about freelancers who need it and don’t realize it till they get a job and then lose the job because of not having insurance.

Because You Cannot Predict the Future

• No business owner has a crystal ball hidden in a closet that can predict what might happen in the future. It would be excellent if natural disasters, injuries on the job or lawsuits never occurred, but no one can guarantee that such things won’t occur. For that reason alone, it’s best to be insured.

• With the proper business insurance, small business owners can achieve peace of mind and focus their attention on what they do best — operating a productive, profitable and personally rewarding business for years to come.