“Insurance is not just about managing risks; it is about empowering individuals and businesses to take calculated risks.”
As a small business owner, I often felt anxious about the risks related to my business. “What if my company becomes the next victim of a cyberattack, what if we get hit by some natural disaster or whatnot?”
These what-ifs were responsible for keeping me up at night. Sounds a bit pessimistic, I know, but it is always better to plan for the worst and hope for the best.
This “planning for the worst” approach led me to Small business insurance. It doesn’t matter if you are a solo practitioner, a small business, or an established name in an industry, you need comprehensive coverage to protect your business and allow it to thrive.
That is why I decided to go for small business insurance and in this article, I’ll share everything you need to know about small business insurance before you sign up for one.
Let’s start with the most basic question that you might think of, which is –
Why Small Business Insurance Matters
As someone who likes to be prepared for the worst of times, small business insurance definitely helped keep my cynical thoughts at bay, resulting in peace of mind.
The insurance safeguards my business against financial losses, now I am assured that I will not have to face crippling expenses even if my business gets struck by some unfortunate and unforeseen event like accidents, or natural disasters.
Types of Small Business Insurance
When I was contemplating getting insurance and started to look for what type of small business insurance to sign for, the huge number of options overwhelmed me at first. The options seemed like a complicated web of choices that were too complex for me. But now that I understand it all, I’ll turn this web into bite-sized portions for you to understand.
General Liability Insurance – General liability insurance covers the claims of bodily injury, property damage, or personal injury. For instance, if anyone gets injured at your place due to slipping or falling, this type of insurance can help you cover legal fees and medical bills.
Property Insurance – As the name suggests, property insurance covers damage to business property. If your furniture, inventory, or any property gets damaged due to an unfortunate event, let’s say fire, theft, or vandalism, then property insurance can cover the cost of its repair or replacement.
Professional Liability Insurance (Errors and Omissions) – This can be used in scenarios of mistakes, or negligence. Imagine a printing company misprints restaurant menus, leading to financial loss for that restaurant. Professional liability insurance will cover the cost of settlement or legal costs against that claim.
Workers’ Compensation Insurance – If a worker meets with an accident or gets injured while performing the tasks on site, this type of insurance covers medical expenses and wage replacement for that worker during his/her recovery period.
Business Interruption Insurance – Business interruption insurance covers ongoing or lost income expenses if the business owner is unable to operate due to any covered event. For example, if I own a bakery and a severe storm floods my bakery, forcing me to shut down my shop for a few weeks, This insurance will provide me compensation money for the time I was not able to operate.
NOTABLE FACT Approximately 30% of small businesses that experience a tragic event are forced to shut down permanently within a year. This highlights the importance of business interruption insurance for businesses to recover from misfortunes.
How Small Business Insurance Benefits Your Company
I think now that you know what the different types of small business insurance are available in the market, it is time to discuss the various benefits these insurances provide to your company –
Protects Against Financial Loss – Being a small business owner myself, Financial losses are something I am constantly terrified of and this is the main reason why I decided to go for small business insurance. It reassures me that even if some tragic event passes by, my company will be able to withstand the setback.
Enhances Your Professional Image – I would view an insured company as a responsible firm that values its employees, clients, and most importantly the firm itself. Therefore, having insurance enhances the professional image of a company.
Promotes Business Continuity – I have heard several stories of businesses that were not able to make a comeback and continue after getting caught in some tragedy because of disturbed cash flow. Business interruption insurance can help tackle such events by replacing lost income and covering ongoing expenses.
Supports Legal Compliance – Depending on the category and place of your business, certain types of insurance are required, such as worker’s compensation and liability coverage. These insurances help ensure legal compliance and avoid the hassle of legal trouble.
Boosts Employee Confidence and Loyalty – If I give you a choice to either collaborate or work for a company that has all the relevant insurance done, or a company that is the opposite and does not have anything done, who would you choose?
It is obvious to choose the company with insurance because it provides a sense of security and has a greater chance of surviving after a mishap than the other company. Hence, we can say that having insurance can correlate with employee confidence and loyalty.
Choosing the Right Insurance Coverage
I am sure you must have understood the impact of having insurance on businesses, now if you are considering getting insurance for your small business and do not know how to choose the right one for your needs, then read this section to learn what factors to consider while choosing the right insurance coverage. These are the factors I kept in mind while choosing insurance coverage for my business –
Evaluate Your Risks: I conducted a thorough evaluation and assessment of my business operations to identify the potential risks and based on those risks, I selected the best-suited policy.
Consult an Insurance Professional: I had a few doubts regarding the insurance I was planning to get, so I consulted an insurance professional, who provided me with relevant guidance and helped me navigate through the whole procedure.
Review Annually: Getting the insurance policy once is not the end of the task, I suggest you regularly review your policies to ensure that they align with your business as your company grows and changes.
DO YOU KNOW? The global small and medium enterprise insurance market is worth USD 24.23 in 2024. It is expected to grow at 6.25% CAGR and reach USD 39.35 by the end of 2032.
Final Thoughts
I hope through this article, you were able to recognize the importance of small business insurance and what a huge impact it can have on your business, especially in times of need.
I believe you cannot predict the future, but you can prepare for it. Similarly, you do not know when your business might get confronted with disaster, but you can prepare for it with the right insurance policy. So, it is best to get insurance for your business if you haven’t already.
