Over the course of 10 years, an estimated 40% of businesses will file an insurance claim. And upwards of 20% of those claims will likely be due to theft. Surprisingly, however, an estimated 40% of businesses have no insurance at all, while over 70% are underinsured.
Carrying the proper type and amount of insurance for your small business allows you to carry on when things go wrong. Without insurance, you’ll need to suspend work to deal with court litigation, mediation, and expensive settlements. Let’s look at several ways this can happen.
Client complaints may be a matter of a contract misunderstanding or claims of subpar work. A client may claim you underdelivered, didn’t deliver what was promised, or that you were negligent with the services in some way. Professional liability insurance helps protect your small business against these types of claims.
In 2019, there were an estimated 830,000 contracting companies in the United States. Google shows more than one million searches each month for roofing contractors alone. Yet according to Industrial Safety & Hygiene News, roofing is one of the top five most dangerous professions. Workers compensation insurance helps your small contracting business pay for injuries when accidents happen. This includes paying for emergency medical care, hospital stays, rehabilitation, and more.
Theft and Burglary
Theft and burglary are the reason for an estimated 20% of small business insurance claims. The type of theft protection your business needs depends on your industry. Online ecommerce stores may need property coverage similar to local retail outlets. Trade contractors or moving companies which rely heavily on vehicles for conducting business, may need commercial auto coverage and tools and equipment coverage.
Product injuries are claims made against your company for something you either used for the client’s services or sold to them. A computer repair company may get sued if customers believe they’re using inferior replacement parts. Roofing contractors may use a specific type of coating that is later recalled because it makes people ill. The proper computer repair or roofer insurance will pay for the needed replacements and claims that result.
Fire, Storms, and Freezes
Things happen. Whether a fire destroys the building your company leases, a storm takes off the roof, or a pipe bursts due to an unexpected freeze, the costs can be steep. Depending upon the exact issues that arise, your company will benefit from a Business Owner’s policy, property insurance, or rented and leased premises coverage.
In fact, many landlords require premises coverage. This protects their property. An automotive repair shop may be damaged if an employee backs into a wall when moving a vehicle. A retail store may have a flood due to a toilet being clogged. There are many examples of ways property coverage is an important tool for all small businesses.
Things can happen to people as well. Customer injuries are infrequent, but when they happen they can cost upwards of $20,000. If a customer is hurt at your business location, they will expect your company to pay for any associated costs. This might be as simple as paying for urgent care, or it could mean paying for an ambulance, emergency room visit, and extended hospital stay.
A general liability insurance policy includes bodily injury coverage for these types of situations. Sometimes this protection can help head off a full-blown lawsuit, but when litigation arises, it will help pay the legal fees. It also pays settlements and judgements, ongoing medical costs, and other fees associated with the claim. This is useful not only for large and complicated claims, but also for those claims that have no merit. Without coverage, you would be forced to take time away from work and family to defend yourself and pay all the associated costs out of pocket whether you’re at fault or not.
As evidenced in the examples given throughout, problems can arise for any type of company. You may run an internet store, an online consulting company, a photography studio, or a general contracting company. The type of business you run only matters in choosing the type and amount of insurance to get.
Being prepared is crucial to the success of your company. And though insurance may be a distasteful topic for some, it is the best way to protect your business and yourself when issues arise. A business insurance policy takes care of the legal and financial issues so that you don’t have to. You can continue working and earning an income while the policy provides the protection it was designed for.
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