Since 1980, the US has experienced 273 weather and climate-related disasters. Together, these resulted in over $1.79 trillion in damages.
You can mitigate the cost of natural disasters by having insurance. But if you’re a business owner, that only covers one form of insurance you need.
There are many types of insurance for small businesses that you should consider to protect your property, employees, clients and finances. While some are required by law, others are optional but a good idea for ensuring the future of your business.
Keep reading for 5 powerful reasons that your small business needs insurance.
1. Not Having Insurance Is Illegal
In every state, businesses with W2 employees must have worker’s compensation insurance. Some other types of insurance that may be required by law include unemployment and disability. The laws regarding the latter types of insurance will vary by state, as will the regulations around worker’s compensation insurance.
Not having worker’s compensation can lead to heavy civil or criminal penalties. In some cases, you may be excluded from public contracts.
2. Accidents Do Occur
Every year, there are more than 8 million hospital emergency room visits because of a fall. These injuries are more common than you think and, if one occurs in your business, you need insurance to cover you. An accident like a fall can lead to very large legal bills that are covered with general liability insurance.
In addition to customer incidents involving bodily injury or property damage, general liability insurance covers you against claims of libel and slander.
3. Damage Is Expensive
If your business sustains damage from a fire, paying for those repairs out of pocket could put you out of business. For that, you need commercial property insurance. It covers everything from your physical location to other property such as tools, inventory, equipment, and furniture.
When protecting yourself against this kind of damage, consider that “Acts of God” aren’t usually covered by commercial property insurance. For protection against floods, hurricanes, tornadoes, and similar natural events you’ll need to purchase all-risk and/or peril-specific insurance.
These types of insurance can be extremely costly, depending on your physical location and the assets you’re looking to protect. To help mitigate those costs, among other benefits, some companies have embraced captive insurance.
4. Replace Lost Income
When a disaster hits and you can’t operate your business until repairs are made, you could potentially lose a lot of money while your doors are closed. In that case, business income insurance can help you.
This type of insurance replaces that lost income until you’re ready to start up again. That way, you’re still able to pay your bills and maintain your payroll.
5. Security Breaches Are Increasingly Common
In 2020, 28% of data breaches occurred among small businesses. Data breaches on small businesses are increasing and the security of your clients’ data is more important than ever.
One way to keep data safe is to have data breach insurance. This insurance can help you pay for things like hiring a PR firm, notifying affected individuals, and providing credit monitoring services to victims.
Do You Need Insurance for Small Businesses?
Some types of insurance for small businesses are legally required. Others protect you, your employees, and your clients from unexpected accidents and natural disasters.
Having the right type of insurance is essential to the success of your business. But there are other elements to think about as well to protect your company financially. Check out our blog for more business tips and advice. Visit the Finance section of the Everything Entrepreneur Blog today to learn about risk management beyond insurance for small business.