7 Reasons Corporations Need Insurance
Reasons Corporations Need Insurance
Starting a business is an exciting journey where dreams become reality. However reality is fraught with perils. Entrepreneurs have many concerns – generating revenue, developing product, creating marketing collateral, and retaining employees. With all of these important task, the process of buying insurance seems like an unnecessary chore. Ironically, insurance is one product that can help a business protect these assets. In truth insurance isn’t just an obligation, it is a means to protect your dream and all of its so that you can sleep easier.
What is Business Insurance?
Defining business insurance is very simple. Business insurance is a method of transferring an individual or entity’s risk against potential perils to an outside entity for an agreed upon sum that corresponds to the likelihood of an occurrence.
The reality of business insurance is much more complex. Just as in the world at large, the business world is fraught with peril. There are risks associated with clients and customers that visit your business, and others associated with you visiting their sites. Competitors pose another risk, they may feel that your advertisements defame them and seek compensation. Employees, for all of the value that they add to your business, represent liabilities as well. They can injure themselves in the course of work, injure a customer, or even commit a fraudulent act in your name that injures your business. Frankly, even mother nature, in all of her beauty, represents a catastrophic risk.
Insurance will not prevent any of these perils from occurring, however, as the retainer of your risks, your insurer will help your company to recover from a loss and return to business in the most expeditious manner possible.
7 Reasons Corporations Need Insurance
Lawsuits, both frivolous and warranted, drain organizations of many resources – finances, human capital, energy, morale, and most importantly time. As we live in extremely litigious times, lawsuits are bound to happen. In fact, according to Norton Rose Fulbright, the number of businesses facing litigation across industries has increased by 6% from 2015 to 2016.
Even if you are the most cautious, law abiding business owner, there is still a potential of a suit being filed against you, your employees, and your company. While you cannot control if or when this will happen, the right insurance coverage will help mitigate the impact a suit will have on your operations.
Many states require that a business purchases and maintains industry specific insurances. For example, in some states, a contractor is required to purchase and carry both workman’s compensation insurance and general liability. Many states require white collar professionals such as accountant or lawyer to carry a form of professional liability insurance. All federal contractors are required to maintain certain limits of insurance. Licensing organizations oftentimes require proof of insurance, and they are known to verify that such insurance is maintained.
Ignoring state regulations can result in fines, loss of your license, possible jail time and loss of revenue. These penalties can add up but they are easily avoidable by maintaining the mandated coverage.
Respondeat Superior is a term used in situations where an employer is facing suit based on the actions of an employee. Though an employee may cause the injury, a claimant can recover more in a suit from employers who have a greater wealth of assets. The same can be said for subcontractors, distributors, and consultants. Companies that subcontract work or hire independent consultants often require these agents to hold their own insurance to mitigate the potential of having to defend not only themselves but their agents in the case of a suit.
Humans: Capital Risk
Insurance isn’t just about protecting you, your business, and assets. It’s also about protecting your employees. Worker’s Compensation, disability, and health insurance show employees that you care about their well-being and are prepared to cover work-related injuries. Also, offering employees health care benefits via insurance, is an attractive incentive for many of today’s top candidates.
Natural Disasters Happen
Just like you can’t control others, you cannot control Mother Nature. As we have seen so often in 2017 alone, fires, wind, floods, and storms can wreak havoc on buildings, equipment, transportation and individuals. All of these things are integral to your business operations. Insurance can help you to reclaim lost revenue in the case of business interruption, replace your equipment, and in the case of a catastrophic loss, rebuild your locations. Replacing business property or rebuilding is expensive and the average corporation can’t afford to rebuild out of pocket. Your insurance can retain this cost and make you whole.
Sometimes having insurance is for the purpose of insuring your business. Insurance is a powerful tool to show clients that you are business ready. Not only have you created your product or mastered your craft, you pay attention to the fine details of owning and maintaining a business. Clients may perceive a business that will cut corners on something as crucial as insurance less favorably than one that takes care of every important detail. Having insurance shows you are a professional
Protection Against Other Business Interruption
A transformer can blow out causing you to lose power to your computers or refrigerators. A building that is directly next to yours may collapse forcing the city to shut down access to your business. Your supply chain may break down forcing you to lose access to materials that are necessary to the creation of your product. These are unpredictable occurrences that can impact your business. Insurance is a tool that can help you to maintain cash flow even when your business is interrupted.
These seven reasons are depict why insurance is not only a value add but a necessity for any organization. They also show why finding the right agent to help you figure out exactly what type of insurance coverage you need is crucial. The right coverage is more than a low price. An insurer is more than a means to an end. Your insurer is a business partner that will work with you to insure that your coverage is built to protect all facets of your business. When searching for insurance you are really shopping for peace of mind. If you need assistance in finding the correct coverage for your business, feel free to reach out to the expert agents at CoverWallet. Our goal is to learn about your operations, your clients, and your business as a whole so you are covered when the perils of reality attempt to turn your dream into a nightmare.