When you’re just starting out in business, it’s easy to skimp on insurance. Many small business owners believe since they have little money and few assets, no one is going to sue them. Business insurance is an unnecessary expense or an inconvenience that’s only necessary for large companies. Natural disasters? Not likely. And life insurance? No way. Nothing is going to happen to you anytime soon, right? You’ll add that on when you have a little more money built up.
Unfortunately, that’s not how things always work out. Here are three small business realities:
Small companies get sued all the time. Business insurance can help you cover the costs of any legal fees that may arise from a lawsuit against your business. For example, it can help you pay for the cost of defending yourself in court. And just because your business is a corporation or limited liability company (LLC), that doesn’t mean your personal assets are always protected. Under certain circumstances, you could be held personally liable if you are slapped with a lawsuit. That’s why liability insurance is so vital. Depending on your business, you may need general liability insurance in addition to professional liability coverage.
Natural disasters can happen anywhere, and many businesses do not survive them. Weather patterns are unpredictable. When it comes to flooding, for example, it’s estimated that 25 percent of flood insurance claims come from homes and businesses in areas at low risk for flooding. Here’s another statistic: Nearly 40 percent of small businesses never reopen their doors following a disaster. Why? Disasters are expensive. The average commercial flood claim, for example, more than $75,000. Aside from disaster-specific coverage, there’s also business interruption coverage. This type of insurance provides compensation if your business is temporarily shut down due to a disaster.
Many businesses do not survive the death of an owner. Life insurance can help your business survive if something happens to you. Statistics show that many businesses crumble after the death of an owner. Life insurance can protect your family and/or your business partner from financial disaster.
Business insurance is not required by law, but it is highly recommended for all businesses. Even if your business is small and doesn’t have many assets, it’s still important to have some form of protection in case something goes wrong.
We understand that small businesses have to make a lot of difficult financial decisions. We can help you identify your greatest insurance needs and help you make smart decisions based on your financial resources. Give us a call today!