The Need for Business Insurance
Running a business can be highly rewarding; however, it has its risks. There are many risks associated with running an enterprise that can hurt your business if not prevented. All businesses, whether big or small, are at risk. Small and medium-sized enterprises (SMEs) tend to be at higher risk than large enterprises. As a small business owner, if your office gets engulfed in fire or a flood destroys your property, it may be difficult to redeem the loss since smaller businesses have fewer assets to draw from. A company in the growing stages must avoid potential losses at all costs. Buying business insurance can help to protect your business against such losses.
Enterprises are required by the law to have certain coverages before employing workers or offering services to customers. Business insurance covers damages due to fire, theft, burglary, vandalism, and damaging weather conditions. Also, your workers may face risks while performing their duties like falls or exposure to harmful substances. You will be held liable if a client sustains an injury on your property or from your products. If you do not want to spend out-of-pocket costs on these liability claims, getting business insurance is the way to go.
What Type of Insurance Do I Need for My Business?
Insurance for a business includes various types of coverages. Make sure to carry the right coverage so that your company can be better protected from liability and financial loss. Here are some different types of insurance coverage that might be necessary for your business.
Workers’ compensation insurance helps protect your employees if they become ill or injured on the job, rendering them temporarily incapable of working. A workers’ compensation policy is required by law for most businesses, and a majority of the workers will consider applying to your business only if you have this coverage. It also helps to protect the employer from lawsuits resulting from workplace injuries.
A business owner’s policy (BOP) is bundled insurance that combines general liability insurance with property insurance at a discount. It is the ideal coverage for small enterprises.
Commercial automobile insurance covers damages to all vehicles that are used to carry out work duties like carriage or transportation. Personal auto insurance will not cover vehicles used for work, so it is important to purchase a commercial auto insurance plan.
Cyber risk insurance helps protect against internet-based risks like a data breach that discloses sensitive customer information.
General liability insurance protects your small business against third-party claims that involve property damage, bodily injury, or advertising injury.
Do I Need Business Insurance If I Have an LLC?
Although running a limited liability company (LLC) helps protect your assets and reduces your liability, it does not offer adequate coverage for your enterprise.
A limited liability company has limited protection against lawsuits. Your personal assets are treated separately from your business. However, you may be held responsible for certain issues relating to your company. Buying a commercial insurance policy can help you prepare for such situations.
What Are the Limits of Limited Liability?
An LLC structure separates your personal assets from your business assets. However, under certain situations, your personal assets would be held liable in the event of a lawsuit brought against your business. The following are a few such instances:
- If you fail to separate your personal expenses from your business-related expenses
- If you are irresponsible or negligent on purpose
- If you have signed a personal guarantee for a loan
- If you failed to pay taxes deducted from your employees’ wages
- If you engage in illegal activity like fraud
- If a customer slips and falls in your office
What Insurance Is Required for an LLC?
Some coverages are better suited for large businesses, while some are designed for smaller ones. Most coverages are optional, but you cannot ignore specialized coverages that are mandated for your specific types of business. Note that laws vary from state to state, so it is best to research the mandatory policies in your area.
Can You Run a Business Without Insurance?
You can run a business without insurance; however, you may be fined or penalized for failing to follow what is required by law. Running a business without insurance is putting it at risk. To avoid business interruptions and property losses, you should buy adequate business insurance.
The experts at Udell Family Insurance are here to ensure that you have the right business insurance in place. We are ready to assist you with all your coverage needs today.