Finance: Business Insurance
Updated: Sep 14, 2019
Insurance is essential, especially to businesses where they need to be ready for any potential risks. Business insurance protects businesses from potential financial losses, liabilities, damages, and any risks that may occur. Companies will evaluate their insurance needs on what could potentially happen, depending on the environment the company operates in. Most importantly, for small business owners to assess their needs because they may have more financial exposure in the event of a loss. Having the most accurate coverage can significantly minimize the negative impact of claims.
For business, there are many different coverage options; the coverage needed depends on the industry, the size, location, and the number of employees. Moreover, as a business grows, the insurance needs will most likely change, though at a minimum business will usually have a liability policy, as well as property, and Worker’s Compensation coverage. A liability policy is a policy that helps protect a business against any claims of harm or wrongdoing. If there was a lawsuit filed against a company they could face hefty legal fees even if they did nothing wrong. Also, without liability insurance, the company would need to pay the legal, settlement, and judgment fees out of pocket. The most common policies businesses get are general liabilities, professional liability, and commercial umbrella insurance. Ideally, all businesses should have some form of liability insurance.
Furthermore, property policies help businesses recover from any property damages such as any damage to the physical location, damaged tools, assets, and documents, as well as any damage caused by vandals. There are even options to add on to the policy to help cover lost income. This can help pay fixed costs if your business can not operate because of property damage. Also, the Worker’s Compensation coverage provides employees benefits for any work-related injuries and illnesses. It can also cover the company if a worker’s family decided to sue. Depending on the state, Worker’s Compensation may or may not be mandatory, though it usually is. The state also determines how much it costs based on factors such as job risk, business’s claim history, and the size of payroll.
Business Insurance helps all businesses manage risk by providing financial protection that may happen during the ordinary course of business moreover since it protects a company’s financial assets, intellectual property, and physical, getting business insurance well worth it.
Kagan, Julia. “Business Insurance.” Investopedia, Investopedia, 23 Aug. 2019, www.investopedia.com/terms/b/business-insurance.asp.
“What Is Business Insurance?” The Hartford, 8 Aug. 2017, www.thehartford.com/business-insurance/what-is-business-insurance.