A recent survey of 30,000 small businesses regarding their business insurance coverage uncovered some truly astounding results:
- 44% of the businesses have never had business insurance.
- 21% of the businesses had insurance at one time, but let the policy lapse.
- 78% of the businesses currently have no insurance.
It’s easy to look at those numbers and conclude that business insurance is just an unnecessary expense. After all, if so many small business owners aren’t investing in it, why should you? But then you learn that every year, 1 in 3 businesses faces an incident that would be covered by business insurance. Clearly, this is a resource that every business may need at some time — and perhaps even multiple times.
So why do so many small businesses choose to forego business insurance?
The answer is different for everyone, but in all cases, it’s shortsighted and reckless to operate without business insurance. It’s your responsibility to keep your business safe and secure, and business insurance is a part of that. If you’re on the fence about whether to take out a policy, spend some time exploring what type of policies are available and why they are an essential business safeguard:
1. Policy Options
The type of insurance you need depends on what sort of business you run, but these are the most common policy options:
- General Liability Insurance – This type of coverage protects your business from liabilities resulting from bodily injury, property damage, legal settlements, and much more.
- Property Insurance – If your business and the property inside is damaged in a strong storm or because of a fire, this type of coverage defers some or all of the costs.
- Professional Liability Insurance – When damage is caused by mistakes on the part of your business, this type of coverage helps to limit the damages. It is highly recommended for service providers like accountants.
- Product Insurance – These policies will protect your business if damage is caused to persons or property as a result of faulty products that your business produced.
2. Policy Considerations
Business insurance is an important investment, but it’s also an ongoing expense. Ideally, you will take out the exact coverage you need and nothing extra. Keep these considerations in mind as you craft your coverage plan:
- State Requirements – Some states require businesses to carry certain policies at specific limits. Contact your state’s Department of Insurance to explore whether any of these mandates apply to your business.
- Business Risks – How much do you have to lose, and how likely is it that a catastrophic event will impact your business? The answers to these questions reveal what type of coverage you need at what levels.
- Budget – You can’t spend what you don’t have. Calculate how much you can spend on business insurance monthly/yearly, then investigate how much coverage you can realistically afford.
- Under-Coverage – A policy with low coverage limits provides very little protection. Don’t be lured into a false sense of security by committing to policies that leave gaping holes in your protection.
3. Preparing for the Future
As a business owner, you must always be looking one step ahead and anticipating the unknown. You must also acknowledge that some things are simply out of your control. When those things occur, it’s your business’ ability to pick up the pieces that determines whether you will get back to normal operations — and how long that will take.
Business insurance is a crucial part of the preventative equation. Like most insurance, it’s something you may not use a lot but, when the time comes, you will depend on it heavily. Instead of dismissing it as irrelevant, shift your perspective and think of it as an essential.
And don’t stop with insurance. Coverage can help you get back on your feet in the event of a disaster, but recovering is even easier when you limit the damage done. Having a high-quality safe in your business and in your home provides the ironclad protection you need to preserve your most important documents and property. Even if everything else is lost, the things in your safe will survive.
When you’re ready to round out your business protection, work with Western Safe to explore your needs and options. We’d love to help you find the safe that meets your personal and business needs today.