Is Small Business Insurance Necessary?

small business insurance
Should I insure my business?

If you are a small business owner, chances are you have a lot on your plate. You have to think about employee salaries, hiring on new people, replacing the technology in the office, and learning how to attract new customers, as well as a million other little things. Is business insurance on the long list of your responsibilities?

Reasons you should insure

1. There Are a Lot of People Working

It can be difficult to keep track of the employees in a business if there are more than a handful of them. Some of these employees might be located in an entirely different state or country, depending on the focus of your business. The more there are, the greater the chances are that something could happen to one of them. You cannot be everywhere, and you cannot control everything. To play it safe, even if you do not foresee any problems in the future, you may want to look into getting small business insurance.

2. Dangerous Work Is Involved

Employees that work for a small construction business or any other business that deals with dangerous materials are always putting their lives at risk. They could become severely injured, and if they believe that the employer is to blame for their misfortune, they may sue. Small businesses generally do not have the funds to fight off legal problems, nor can they afford to lose an employee for an extended if not permanent period. If the nature of your small business is risky, insurance is something for you to think about. It is better to be safe than sorry.

Things you don’t need to insure

1. Insuring against weather

Homeowners and business owners alike have been known to insure their location of residence against certain weather events. However, you do not need to do the same if you do not experience the weather that the insurance covers. For example, do you have any problems with flooding in your area? Do you deal with tornadoes or hurricanes during certain months of the year? If you do not, then you do not need to purchase coverage for them. To insure against things that rarely or never happen is a waste of money. That money can be spent on more important things instead.

2. Cars aren’t often used for the business

Some small businesses are so minimal in their scope that they use only a few or no cars to run their operation. They may use cars that have been used previously, or they could encourage or require that employees use their own personal cars for tasks. If your business doesn’t rely on car travel, you can avoid hefty car insurance expenses. Older used cars are not worth the monthly fees and can carry minimal insurance, and personal cars do not need to be insured by the business. Unless the cars are brand new or rare, going out of your way to insure them is not necessary.

You have a lot to deal with as a small business owner, and the last thing you need is more expenses to add to the mix. It is up to you whether or not you really need insurance, so it is important to look at your individual situation to decide what your business needs.

Photo Credit: Office cubicle by Ian Lamont/Flickr

Andrew Garcia is an insurance consultant, specializing in business liability coverage for events companies and tradesmen.