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Business Lines Education Article
Insurance 101 for new business owners
Is business insurance necessary?
The short answer is absolutely. Especially if you have employees, in which case some types of insurance, including workers’ compensation and disability insurance, may be required by law. You may also be required to have insurance if you have a company car. In other instances, insurance coverage can be a stipulation of getting a business loan, lease, supplier or customer contract or a state or local business license. In many cases, though, there are no laws, rules or regulations that mandate business owners make smart choices about protecting their business. As a result, around 40% of small businesses don’t have insurance1.
What’s the risk?
Many small businesses go without insurance because of the cost. But those businesses haven’t carefully considered what not having insurance could cost them. The reality is, all businesses face risks that could be financially devastating without insurance protection. Obviously if you’re opening a skydiving school, your business risks are going to be a lot more substantial than if you’re opening up a bookstore. But no business is entirely immune to risks, which could include:
•Natural or manmade disasters like tornados, floods or fires
•Theft by an employee
•Death of a business partner or key executive
•False advertising or copyright infringement
•Malpractice or negligence
•Product-related injuries or accidents
•Data breach, and much more
Without the right insurance coverage, any of these situations could break your business—and even jeopardize your personal assets—closing your doors much more quickly than you opened them.