Whether you’re a sole proprietor or the head of an LLC, you probably wonder, “Do small businesses really need insurance?” Insurance is necessary to protect your assets. It can shield you and your company from lawsuits and lost income and ensure that you don’t end up losing everything. Depending on your type of business and its location, carrying insurance might even be the law. Let’s give in and examine small business insurance.
Small Business Insurance Requirements
When asking, “Can I run a business without insurance,” it’s essential to understand the law. The federal government has insurance requirements if your small business has any employees, you must carry disability, unemployment, and workers’ compensation insurance. You also might have other insurance requirements, depending on location.
The Importance of a Business Owners Policy
While you’ll want to start with disability, unemployment, and workers’ compensation insurance, you will need additional coverage, as well. A Business Owners’ Policy is a good choice if you want to protect your business. It includes general liability, income, and commercial property insurance.
General liability insurance will cover you against slander claims, libel, property damage, or bodily injury. Business income insurance will then step in and replace any lost income if you have to close your doors due to wind damage, fire, theft, or other disasters.
Commercial property insurance will protect your location and the property inside of it. For instance, let’s say you have a restaurant that burns down. This type of restaurant insurance will cover your equipment and the building itself.
You should also consider coverage beyond a Business Owners’ Policy. For example, data breach insurance is essential if you store client or customer information. Then, if you suffer a data breach, it will help you pay to notify customers, hire a PR firm, and provide your customers with credit monitoring services.
Professional liability insurance can also protect your business. This policy will kick if you make a mistake when providing professional services. For example, assume you work as a project manager. You are tasked with telling a client that they need to sign off on a project before it can proceed. You forget to do it, and the project is delayed, causing the price to increase. Your insurance will cover you.
These are just some examples of your small business insurance options.
What Happens if No Business Insurance?
If you don’t have small business insurance, you could end up with a wealth of problems. First, you will break the law if you don’t meet the government’s insurance requirements. For instance, if you have employees but don’t carry workers’ compensation insurance, you could end up with a hefty fine. Also, if an employee gets hurt and you don’t have coverage, you’ll end up footing the bill. That could bankrupt your company.
You also won’t have protection if you suffer a property loss, have to close your business for some time, or get sued. It will be challenging to recover if you don’t have small business insurance.
Compare Small Business Insurance Quotes Today
Small business insurance will protect you and your company. However, you might not be sure of the type of coverage you need.
Reach out to a licensed Freeway Insurance agent to find out more about your coverage options. We can help you choose coverage and find the best one for your needs and budget.