Most small business owners think business insurance will be too expensive or believe they are too small and don’t need it at all. However, the facts are four out of ten business will experience a property or liability loss in the next ten years.
Topping that list for most common is burglary and theft. But thanks to the age of the internet the costliest claim for small business owners is reputational harm. Reputational harm includes violation of privacy, libel, or slander and losses for those come in at a staggering $50k.
Most small businesses would not be able to survive such a claim, and many more may not have the funds or resources to keep the doors open after other costly scenarios either such as a slip and fall injury or fire.
Business Insurance Could Save Your Business from Bankruptcy
Unfortunately, there is not a “bankruptcy” insurance policy, but having the proper business insurance in place could pay for things like lawsuits or theft or other incidents that often lead business owners with no other choice but to file bankruptcy. In 2016 alone, approximately 38,000 businesses declared bankruptcy in the US.
Now, let’s put that into perspective.
If you run a small mom and pop shop selling, say baked goods, and one morning a customer slipped and broke their arm in your store. Could you afford the $20,000 that it typically costs for that type of injury?
What would pulling that sum of money out of your reserves (if you have them) do to your daily operations?
The trickle-down effect of a loss like that could result in big issues for your business. Now, compare that to the small cost of taking out a business owners policy or other commercial package policy.
Seems like a no brainer, right? You are not only buying protection for your business; but buying peace of mind for yourself when the unexpected does happen, you will be prepared.
Protecting Your Business Against Claims
So now you know why business insurance is so important, here are a few other ways you can avoid a loss.
Are customers on-site?
Examine and maintain your parking lots and sidewalks daily. Put signage around slippery surfaces. Make sure you check all lighting inside and out for dark spots and keep those areas well lit. Make sure there is no lifting of carpets or rugs that could cause slip and fall injuries. Always check smoke detectors and make sure all exits are clearly marked. Carry a general liability policy.
Manufacture a product?
Protect yourself against product liability claims by testing your product completely, add warnings to dangerous goods, make sure you are comfortable with your supplier’s operations. Carry product liability insurance.
Have a Website?
Cybercrime is costly and can cause companies to lose much money. Be sure you have the proper procedures in place, encrypt data, do a yearly vulnerability test, train employees, use multifactor authentication and make sure you carry cybersecurity insurance.
Formulate a code of conduct and enforce it. Make sure there are checks and balances in place for all money handling. Have clear policy and procedures in place. For example, someone who reconciles the credit card, should not be the same person who enters the transactions. Pay attention to employee behaviors; if an employee with access to the company’s finances or operations is always working when nobody else is or never takes a vacation, they could be up to no good. Add employee theft and dishonesty coverage to your insurance policy.
Contact us today to discuss your business insurance options with a licensed insurance agent.
For more information on the business insurance packages we offer, visit our commercial insurance page.