Protecting your business from insurance

No business is immune from potential crises or unexpected events. An insurance nowadays is a necessity for every business, no matter how badly it is doing. The dangers of not having insurance almost always outweigh the cost. A crisis befalling an uninsured business could lead to severe financial problems or even bankruptcy. No matter how well-equipped businesses today are in dealing with property damage, damage or the complete destruction of businesses still occur. Fire damage is a common hazard and the potential for damage is even worse outside office hours when all or most of the employees are away. Other types of damage depending on region includes floods, hurricanes, and snowstorms. These damages usually incur high costs in addition to the likely business downtime for repair, hence the need for insurance fromĀ

All businesses are subject to unexpected downtime, no matter how smoothly it is operating. A business may face unexpected downtime from a computer systems failure, severe weather, or failure on the part of electricity providers. During this, the stock may depreciate and employees still need to be paid. This downtime is costly, especially in a competitive business environment and without insurance coverage to protect the business’s losses during the downtime.

Data breach is a relatively new but increasingly important danger as business become increasingly reliant on information technology. This is particularly important if the business is run on an e-commerce platform or carries thousands of confidential customer information. These breaches not only incur a high financial cost but hurt the public’s confidence in the business. It is imperative the business seeks to quickly restore public confidence in the aftermath of the breach which can be very difficult without insurance coverage.

Lawsuits frequently happen between businesses and also between businesses and customers. These occur due to claims ranging from copyright infringement, data breach, personal injury, and sub-standard product or service. It is difficult to predict the outcomes of lawsuits and the cost if the business loses the case. A loss is usually expensive for the business. Even an unwarranted lawsuit can cause time and money. There is always a possibility that a business can go bankrupt even if it is seemingly doing well. Settlements from lawsuits can often be enough to bankrupt a business. Hence, insurance covering lawsuit can prevent a business from bankruptcy. All businesses are subject to the influence of the economy, Tough economic periods may force some businesses to carry out big layoffs which have shown to cause lawsuits.

Employees always run the risk of getting involved in accidents, such as in labor-intensive tasks or when driving a company car. Businesses seeking to expand may also have a few undergoing construction projects. Most businesses with one employee or more are legally required to have a worker’s compensation insurance. Not doing so could be considered breaking the law which can have serious legal ramifications.

The dangers above are common to businesses but the severity and types of dangers are different for individual businesses and industry. It is important for businesses to not only be covered by insurance but also understand their coverage. Businesses should have a consistent review of insurance and have changes be made according to changes in circumstance.