Who Should Purchase Business Insurance?

 

While many small business owners may consider it an unnecessary expense, obtaining business insurance can actually be one of the smartest moves he can make. Business insurance protects your business in cases of natural disasters, vandalism, theft and more. While you may think that you'll "cross that bridge when you come to it," that's unsound business thinking and can lead to instant financial disaster.

WHO SHOULD HAVE IT?

Every business should have business insurance. It doesn't matter whether you work from home or lease office space somewhere. It doesn't matter if you have a thousand employees or just one—you. Insurance protects against financial hardship and loss, and your business should be included on that protected list.

You're a contractor, and your truck gets stolen. You should have had theft insurance on that truck and its contents, but what protects against lost revenue when you can't get to a work site or have the tools available to do the job?

Your business involves computers? What happens if your laptop gets stolen or damaged? Your homeowner's insurance may not cover work-related losses, but you still lose revenue.

What if someone sues you for some reason, valid or not? Do you have in reserve the kind of cash an attorney can cost you, much less any damages that may be invoked against your business?

Who should have business insurance? Anyone who owns any kind of business, that's who.

WHAT SHOULD IT PROTECT?

Two basic areas should be covered by business insurance: It should protect the business itself and the business owner and business assets.

By protecting the business itself, business insurance often pays lost wages for a specified time up to a noted total amount, which protects against lost revenue. It can pay for replacement equipment if necessary to ensure you are brought back to the level of preparedness you had before the loss occurred.

It should also protect personal assets from attachment to payment of a judgment against your business. Sole proprietorships, for example, hold the person and the business as the same entity. Therefore, if you lose a law suit for substandard work, for instance, you could lose your house—a personal asset. Any business loss is a personal loss, but business insurance can help you avoid losing your personal assets to cover business losses.

If you own a business or want to start a business, consider business insurance as part of your start-up costs and operating expenses. You might be able declare the costs as business expenses and deduct the money off your taxes.

The author of this post is João Mortalha who works at Coupon Croc - the best source for all of your holiday deals and discounts.