Do You Need Business Insurance?

Why Insurance Is Always Important

Many small business owners who are just starting out face the daunting challenges of finding a way to compete in the marketplace and grow their business. Many sole proprietors and even small partnerships find it challenging enough to merely focus on paying the bills and increasing their customer base, let alone worry about other elements of their business such as insurance requirements.

The fact is that many start-up businesses neglect insurance until it is too late because they see it as an expense they do not need to incur when just starting out. The problem is that the smaller the business is, the more likely they can have their personal assets held liable if a suit is brought against the business.

Insurance for Large Businesses Is Taken Seriously

Large corporations and companies carry multiple forms of insurance such as:

• property and casualty,
• liability,
• product liability,
• health,
• disability,
• workers' compensation, and
• insurance in case the business is interrupted.

Large businesses carry multiple policies because they can afford to do so and because today's society has become litigiously oriented to holding companies and individuals financially responsible for their actions or misdeeds.

The basic fact is that any business that sells a product or service can be sued by a consumer if that product or service is defective. Even the smallest company, partnership, or sole proprietor just starting out in their garage is susceptible to litigation should something go wrong. In fact, these smaller organizations have greater personal exposure than large enterprises.

Business Liability Insurance Is a Good Starting Point

Because of this, it is important for businesses of all levels, regardless of size, to seriously consider a minimum of business liability insurance. Liability insurance is a good start to protecting personal assets should something occur on the business premises or with a product or service.

There are policies available for newer businesses that provide a combination of insurance types to cover a broad variety of possible occurrences including:

• property,
• casualty, and
• liability.

These business owner's policies are specifically designed for start-ups and smaller organizations and help limit the exposure of the business to litigation. These policies also minimize a small business owner's personal liability, which is the most important consideration.

These policies are usually offered by insurance brokers who specialize in offering coverage to the type of business they cover. The policies are generally reasonably priced and offer a decent level of protection for the business. As the business expands, policies that are more detailed can be purchased that offer greater protection. Obviously, start-up companies that have no employees do not require workers' compensation insurance or life and disability plans. These can be added later when the company expands. Regardless of the size or type of business, owners should consider business insurance of some sort as an important component of their business start-up expense.