[This article was written by Erica Silva.]
Check out the recent newspaper. The chances are you will find a story or two about people suing each other. It isn’t uncommon for customers or other companies to sue businesses. Did you know that legal issues cost businesses approximately 100 billion USD every year? For a small business, this can prove to be devastating.
One thing that is very important for all businesses to have is liability insurance. What is liability insurance, you may wonder? Well, it is an insurance that provides coverage to companies from various types of damages. This ranges from bodily injury to property damage. In short, anything that your business is found liable of, the liability insurance protects it.
Do you think your business doesn’t need liability insurance? Well, here are eight reasons that might change your mind.
- There is a high probability that you could get sued
Did you know that 36% to 56% of small businesses tend to get sued at some point during their operation? Whether it be accidents or unsatisfied customers, lawsuits are a reality that most businesses have to deal with.
General liability insurance for small business makes sure you are protected against such lawsuits. This makes sure that you can focus on creating and managing a successful business. And in case things go south, you can always have insurance to fall back on.
- It provides coverage against injuries
Can you take guarantee of the fact that your workplace is entirely safe and accident-proof? Even if you think so, it is highly unlikely that this is the case. Whether it be tripping or falling, employees can quickly get hurt when on the job. As their employer, you are required to pay for their medical expenses. If you don’t have liability insurance, you will have to bear all the cost on your own. This can prove to be a significant source of financial stress.
- It protects you in court
The idea of going to court might seem cool when Harvey Spector does it, but when you are business of the real world, it can be quite a pain. You don’t want to bear the expense of going to court. Why? Well, attorneys are not cheap. The good news is that a significant chunk of the lawyer fees will be covered by the liability insurance. This, in turn, frees you and your business from the burdensome financial expense.
- It protects you from property damage
It isn’t just your employees that you should be worried about. You are also liable for anyone that your employee harms when on the job. Let’s take a pizza delivery business as an example. Your employee is out delivering pizza. However, while on the way, he ends up in an accident. Another car is damaged. The driver demands for compensation for the damage caused. Is your employee liable to pay him? No. Since he was out for the job, your business is responsible. But, liability insurance covers property damage as well.
- It ensures your business’s survival
A blow like a lawsuit can prove to be detrimental to small firms. While large companies can come out unscathed from such expenses, small business rarely does. You might think that paying for insurance and premium for years is a cost. However, you must think of it as an investment that helps your business remain in operation for years to come.
Don’t let one incident define your business. Before it affects your profits and reputation drastically, take a step and get insurance.
- Gives credibility
Generally, people think of insurances as merely being a financial investment or cost. Seldom do businesses consider it as a tool for reputation management. Remember, you are not operating in isolation. What your customers, suppliers and other stakeholders think of your business matters a lot.
To build a solid reputation and make your business look credible, general liability insurance is a must. Such coverage reduces the risk involved for customers. They know that you are financially secure enough to pay them back for damages (for instance, property damages) if such unfortunate events occurred.
To you a statement like “bonded, licensed, and insured” might not seem like a big deal. But for your stakeholders, it is the first step toward building trust and a long-lasting risk-free relationship.
- It helps in retaining and protecting employees
Employer branding is just as important as the overall branding of your company. Liability insurance doesn’t just take away the financial burden off of your shoulder; it also ensures that you are able to deliver medical treatment to your employees when the need arises. When you are not worrying about the cost, you are better able to protect your employees. Why? This is because you are not focused on reducing your cost and instead are concerned about your employees. This, in turn, helps in retaining top talent.
- You can’t predict the future
The biggest reason for getting liability insurance for your business is because you can never know what the future holds. Yes, one should always hope for the best. But at the same time, you should be prepared for the worst possible scenario. After all, you wouldn’t want to be stuck in a situation where you have to pay millions on lawsuit only because you didn’t want to pay a premium on insurance policies.
Don’t be overoptimistic. Be prepared for the unpredictable future by opting for liability insurance.
If you are a small business, make sure you do get all the required insurances. We understand that for a startup, cost-effectiveness is central to all decisions. However, rather than having a myopic view of the concept, think of it as an investment for the future. The liability insurance you take today will be your shield against financial expenses tomorrow. It will cushion the blow for you. And when disaster strikes, any sort of relief will matter.
Your business needs liability insurance. There is no way out of it.
Erica Silva is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs. Find her on Twitter:@ericadsilva1