Starting a small business can be a prudent decision, but have you thought about the costs involved in starting a business? Apart from the initial capital for inventory, there are other expenses you are bound to incur in the course of running your small business. One of these is business insurance.
Being a small business owner, the need to have some form of insurance may not immediately click in your mind. However, taking up small business insurance can prove to be one of the best decisions, but this does not mean it doesn’t come with its own limitations and challenges.
Small businesses can take up various types of insurance. While some are mandatory depending on the region of business operation, others are optional, depending on the type of business. In this regard, it is advisable that you weigh your options on the best insurance coverage that will protect your business in the long run. Before this, however, here are some of the notable benefits and limitations of small business insurance.
A Sign of Financial Stability
You want your business to portray a positive image to your potential clients. By taking up small business insurance, you instill confidence in your potential clients and financiers since you will be proving to be financially solvent. This is a sign of responsibility and shows you are focused on long-term visions for the business.
Notably, this will also work positively in cases where you are seeking business partners or investors in the business. This will also come in handy when seeking payday loans since it proves to the lender that you are fully covered. In fact, some of these may insist that you carry your professional liability insurance as a sign that you are in this for the long haul.
Cover for Liability
This is one of the most important reasons why you need insurance. Insurance can be risky, and anything can happen in the course of your operations. As such, you need to have some form of cushion in case the unexpected happens. This is meant to cover for instances where someone gets injured at your business premises.
Well, you may be tempted to think that since this is just a small business, no major accidents can happen. don’t discount the fact that even minor accidents like someone tripping over a wire and getting their ankle twisted can result in lawsuits that will take you ages to pay for. With small business insurance, you are fully covered in such cases, whether the victim is a client, visitor, or employee.
Cover against Theft
Small businesses are also prone to theft, and you do not want to risk your property and inventory. With theft insurance in place, the insurance policy will replace the stolen property in case of a break-in. Since theft can mean a serious dent to your inventory, you are better off taking theft insurance.
Compliance with State Regulations
For any business to thrive, it has to operate in a conducive environment. This can be made possible by following and complying with the state’s business regulations. By taking small business insurance, you are already a step ahead in the right direction.
Denial of Claims or Slow Payment
Insurance companies have always been synonymous with denial of claims. In some instances, an insurance company will try to find any reason not to pay. It may take advantage of the many types of policies to claim that they did not cover that particular policy.
In other instances, some insurance companies will take ages in the name of investigation, thus delaying payments. They would claim they need to assess the damage in order to understand the accurate costs. This can be frustrating to the small business owner and may eventually end up in the collapse of the business.
As much as insurance is meant to help cushion you in case of a disaster, it also means an additional expense that may not benefit the business immediately. As a small business owner, you are conscious of every penny that goes in and out of business, so try and save as much as possible where you can.
Notably, some insurance coverages can be expensive, especially in cases where it involves workers’ compensation. With the expansion of a business, a review of its policies is necessary to help cover its existing needs. This is an additional expense to the business at the end of the day.
Should You Invest in Insurance as a Small Business Owner?
Based on the above analysis, it becomes apparent that taking up an insurance policy is not just a matter of split-second decision. There are many factors that go into the decision process before you can finally decide what will work for you. With all said and done, it is always practical to have some form of insurance for your small business. On the basic level, think about the need to cover your assets.
In case you need to purchase an additional policy, then you will need to fully assess your risks and take up one that is really necessary. Remember, your policy ought to cover your most pressing risks. Luckily, there are several entities like the National Federation of Independent Businesses (NFIB) where you can get the best advice on the best insurance for your business.
Understandably, the decision on the type of insurance cover to take up is up to your own discretion. However, you also need to stay conscious of the fact that various states have their own regulations on the type of insurance recommended based on the type of business. For instance, some would require that all businesses take up insurance to protect their employees.
However, whatever the case, be sure to look into the details of the policy you are taking to avoid disagreements and frictions when it comes to payment and settlement of claims. Be sure to ask relevant questions of your insurance agent regarding the policy. Most of all, take your time to compare quotes from various agents and opt for one that exhaustively covers your most pressing risks.