Small scale businesses are faced with challenges that range from limited resources, government taxes and policies, breaking into a market niche, to staying ahead of the competition. All of these can be so overwhelming to deal with at the same time. It’s not surprising then to find many small scale businesses crashing in their first few years in the market.
Most often, this crash would have been prevented with the right insurance coverage. But many business owners overlook insuring their businesses, probably because they have a lot of duties they feel is more important. They fail to realize that insurance may just be their only saviour when things go out of hand for their businesses.
Neglecting the necessary insurance covers for your business may amount to risking it all. The importance of insurance to your small businesses can never be overemphasised. In fact, it might just be the only difference between the continued success and the failure of your business in cases of unexpected eventualities—which is likely to happen by the way. Unfortunately, so many businesses of today are not covered by any insurance package.
A study by Next Insurance reports that about 44% of small businesses have never purchased any business insurance package, even those that have been in operation for up to a year.
There are various reasons behind this, prominent among which is the lack of adequate and sufficient information about insurance coverage for small businesses. Business owners are often willing to take the necessary step to insure their small businesses but hold back due to lack of adequate information on how to go about it.
This article will let you in on some of the most important insurance covers that can help your small business continue thriving even when major disasters hit.
- Workers Compensation Insurance: This type of insurance is legally required by the government, failure to have one secured for your business means going against the law. The insurance package covers the safety of the employees under your business, in case they get hurt in the course of working for you.
If your employee sustains an injury while in the line of duty, workers compensation insurance will cover their medical expenses and also pay them a portion of their wages during their recovery process. In addition, if your employee sues you for company related injuries, this insurance package covers the financial implications of defending the lawsuit.
Failure to obtain this insurance cover for your business might translate to serious legal problems for you.
- Disability Liability Insurance: This is another type of government-required insurance. The package provides cover for employees who are unable to work as a result of illness or injuries. However, this time, unlike with the workers compensation insurance, the injuries or illness does not have to be related to work. For example, an employee who suffers from a broken arm at home is entitled to disability benefits.
This insurance often covers the injured or ill employee for a timeframe between 3 to 6 months after they have taken ill.
Failure to obtain this insurance cover for your business might also land you in legal problems. However, the disability liability insurance isn’t binding on all states or regions yet, but then, even if you are not in a state or country where it is required, you might still want to consider obtaining the cover as it can also serve as a good morale booster for your employees.
- Product Liability Insurance: Product liability insurance is necessary for all small business owners who sell tangible products. This insurance type covers product-related damages. For instance, products that were damaged in the process of shipment to your customers can be paid for by this type of insurance. When customers sue you for issues that are product-related, this insurance covers the legal costs.
One good advantage with this insurance type is that it covers the full life cycle of the product in your custody, from the time you receive it from the producer to when you pass it on to your customers. You can get this insurance cover as a part of your general liability policy or as a stand-alone package.
- General Liability Insurance: This type of insurance coverage isn’t really a necessary legal requirement for businesses, but it is absolutely necessary to you, especially if you operate an industry which exposes people to higher chances of accidents.
This type of insurance package covers your business in cases where a third party, maybe customers, vendors, clients, et cetera., obtain an injury from your business property, services or products.
Some of the specific types of losses covered by this insurance type are;
- Damages caused to another person’s property while in the process of carrying out your business.
- Physical injuries caused by your business properties or activities on another person.
- Injuries caused on other people during the process of advertising, like slander, libel, etc.
- Professional Indemnity Insurance: This type of insurance package covers you as a professional, and any forms of human error that might impact your work. Everyone is capable of making some kind of mistake in their job, so making sure you and your team have the right type of cover in place is vitally important.
It goes without saying that starting and managing a business involves a host of risks, and you must make proactive and smart decisions if you and your business must survive. One of the best decisions you can ever make for your business is to get the right insurance cover it needs, some of which have been discussed in this article.