The Importance of Insurance for Your Business

We often hear people complaining about the cost of insurance, but when it comes to your business, the cost of not having it can be devastating. Just imagine what would happen to all your work and dreams if your business was suddenly wiped out by flood or fire, or some other act of nature. What about if an employee was injured or worse while at work? Or what if your revenue suddenly dropped due to road or street repairs in front of your business that prevented your customers from coming in? Perhaps vandals threw rocks at your shop front and smashed it or stole your goods.

The loss that you would suffer from with all these and many other risks would be so high that your business may never be able to recover.  When compared with the cost of insurance premiums it is easy to see which is best. Another problem that often occurs is businesses trying to keep down their insurance costs by insuring for much less than they need. Then when they finally get their payout, it is not enough to repair and start up their business again. Insurance is not the place to try and save on costs.

That said, it is important to get the right kind of insurance and have everything covered that you need for your business. Not every business model will need the same type of insurance. For instance, if you are a sole trader with no employees, you won’t have to worry about worker’s compensation. However, it might be wise to insure yourself. If you can’t work in the business, where does that leave it? There are several kinds of insurance that a business needs and these are:-

  • Public Liability. This covers other people or property that is are harmed or injured by your business. This is not for employees. It is not necessary if you don’t have any members of the public coming into your business. For instance, a sole trader or a business that is conducted completely online.
  • Workers compensation is the insurance you need to cover accidental injury to employees in your workplace.
  • Third party personal injury insurance is often covered with you vehicle registration fee. You may need other insurance if you use your vehicle a lot for work. You may have a van that contains tools or a dog washing service, in which case insurance to cover everything may be extra.
  • Key man If you only have one, or a few employees and the business would lose a lot if the main person could not work, then insurance will certainly help you weather the storm. If you are the key person, then insure yourself because the success of the business rests on your shoulders.
  • Asset insurance is also good to have in case your stock or other assets are stolen or vandalised in some way.

Don’t think that because your business is small it will not need insurance. It is the smaller businesses that can benefit most from having insurance because they don’t have the financial resources to recover without some help. A large business can write off loss to a certain extent, but a small business depends on every cent coming in to survive and remain competitive. Insurance can mean the difference between surviving or going under.