~by Hannah Whittenly~
Regardless of the size or location of your business, not maintaining the proper business insurance is a risky move. From catastrophic events to employee lawsuits and more, your business must be protected at all times.
Even if you’re experiencing an enormous amount of success, if you don’t have the proper business insurance, the following 5 reasons are why you could lose it all:
1. Major Lawsuits
Lawsuits are more common than people think, especially among small businesses. Even the slightest issue brought up by a customer could lead to a major lawsuit, potentially in the millions of dollars. Due to that, business insurance can offer protection against lawsuits, and could protect you from going bankrupt.
All types of businesses need to be protected from catastrophic events, from dance instructors who own a small studio to large construction corporations. Such catastrophic events include building fires, floods, earthquakes and more.
Businesses without the right property insurance policy could be in for a big surprise, and should always be prepared for the worst possible scenario. If you end up losing your most valuable business asset, your business will go down as well.
3. You’re Legally Obligated to Have it
Some insurance policies are required by state law, one of these being worker’s compensation insurance — which is often included in comprehensive business insurance coverage plans. It provides medical benefits to employees who are injured on the job. In return, the employee cannot sue the company they work for, unless gross negligence was involved. These types of policies are not expensive to purchase, and the penalties for not carrying worker’s compensation are steep.
4. Major Data Breaches
If your company stores a large amount of private user data on servers or in the cloud, you’re at great risk for a data breach. At some very well-known retail chains, such breaches have caused quite a stir, and people have received millions of dollars in compensation. Purchasing a business insurance policy that helps protect against such breaches will keep your company afloat should the day ever come.
5. Personal Financial Liability
One of the biggest worries for business owners is whether or not their personal finances are at risk. While forming a corporation will help protect you and your family from creditors if the business goes south, any wrongdoing or negligence uncovered will reach beyond corporate limits. A business owner’s policy or other type of business umbrella insurance can help protect your personal finances.
Like a doctor trying to protect against lawsuits with malpractice insurance, business owners must do the same. A lawsuit or catastrophe could be just around the corner; protect your business with the right insurance as soon as possible.
Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She graduated from the University of California-Sacramento with a degree in Journalism.