The purpose of business insurance for businesses is to help with costs incurred from potential liability claims and property damage. If a business doesn't have business insurance, the owners risk going out of business due to having to pay out-of-pocket for damages and legal claims. Read this article to learn about why you need business insurance and the type of business insurance you need.
What Type of Business Do You Need?
If you're running a small business, you should get a business owner's policy (BOP). BOP combines business income insurance, business property and business liability in a single policy. Business property, which is referred to as commercial property, is intended to help protect business assets as well as the physical location. Some business assets protected include furniture, tools and documents.
Business liability, also referred to as commercial liability, will help pick up the costs when it comes to the liability claims made against a business. If someone is injured at the physical location of your business, this individual may file a lawsuit against the company. Business liability insurance will help with the claim's costs.
Business income insurance is beneficial for replacing lost income if your business stops operating. This type of insurance will make sure that you are still able to pay your bills and cover payroll. An example of a situation where business income insurance may come in handy is if a fire damages the business. Business income insurance will help make sure you receive an income while your business is being repaired.
Is Business Insurance Required?
While you can probably see the many benefits of business insurance, you may be wondering whether business insurance is required. In short, business insurance is not required. However, you may have to cover any extra costs completely out-of-pocket. The high costs could potentially put you out of business and force you to go bankrupt. Therefore, it is best for all businesses to have business insurance.
In most states, workers' compensation insurance is required. The purpose of workers' compensation insurance is to ensure that employees receive medical benefits and wage replacement if they are injured on the job.
Every business should consider getting business insurance. There are many advantages associated with business insurance and few disadvantages. For more information about why you need business insurance, don't hesitate to contact us.