How to Manage Risks in Business – The Insurance Every Business Needs
A successful business is identified by how well it handles risks. Risks are part of business and one cannot avoid it. At the end of every risk is a success story.
One of the best ways to manage risks in business is by getting insurance to help you recover after a bad business or in case of disaster. Unfortunate circumstances are always bound to happen. It takes a very smart entrepreneur to prepare for such happenings. Business insurance help you recover from fatal loses that would have damaged your business.
In this article, I will share with you some business insurance you need to manage risk in business. But before that, you need to understand the reasons why you need insurance for your business.
Why you need a business insurance to manage risks
Risk are part of every business and losses are unavoidable. Getting a business insurance is therefore necessary. Some benefits of business insurance policies are:
- Business sustainability: Insurance can help you pull through a stagnant phase in your business. It might be the only thing you will have to rely on when your business hits the rock bottom.
- Manage lawsuits: To some extent, having an insurance policy can help you when sued. It would cover the extra expenses procured by the lawsuits.
- Secure property: having your property under insurance can help safeguard your business property when accidents occur. It should provide compensation for damaged or lost properties.
- Secure lives: Insurance policies help to provide the money needed for medical expenses gotten as a result of injury to workers or customers. It provides you with emergency income to take care of the damages done.
- Secure income: In a situation where money is being spent paying off damages, insurance policy can help you to continue running your business smoothly without a hitch. Some of those expenses can be workers salary, power costs, maintenance costs etc.
- Paying off debts: Business insurance can help you pay off debts owed to banks or individuals, it can also help you keep your business process running while paying off debts.
8 Major Types of Business Insurance Every Business Needs
General Liability Insurance:
General liability insurance provides coverage for liability claims from third parties. It can cover your legal costs from getting a lawyer to court judgements and settlements.
It also covers injuries gotten at work or damaging a customer’s property.
This insurance is the most common type of insurance that you should have and it’s affordable at about $41 per month.
Commercial Property Insurance:
This insurance is used to cover any commercial equipment. It protects commercial property from theft, fire and natural disasters.
This insurance is ideal for people who use large equipment or buildings for running businesses. It can help a company bounce back from a major damage on commercial property.
Commercial property insurance however does not cover the cost of maintenance arising from misuse from occupants of the business.
The cost of this insurance is determined by assessing the total physical assets of the company in use before meeting an agent. This will help asses the amount the replacement value for any loss.
Business Income Insurance:
This is an insurance made for urgent need of income that is not available. A scenario can be that after covering the costs of a property damage, no money is left for ongoing expenses like rent, bills. This insurance is then used to cover these expenses for the smooth running of business.
It can also help a company bounce bank after paying off a loan or debt. Business income insurance is very important for every business.
Professional Liability Insurance:
This insurance is also called errors and omissions insurance and help protect you and your business against dissatisfactory goods/services.
It protects professionals from lawsuits of clients regarding a product/service rendered. This insurance however does not cover criminal charges, data and information breach.
Workers Compensation Insurance:
This insurance covers costs of workers. Workers compensation insurance is needed as soon as you hire your first employee. It can cover medical costs, work-related injuries and illnesses. In some areas, workers compensation insurance also covers lawsuits expenses fired by workers.
Such expenses include:
- Court expenses
- Attorney’s fees
Product Liability Insurance:
Product liability insurance covers the risks involved in an organization’s product. It covers the costs of claims made that your product injured or caused damage to a third party.
You should consider going for this insurance if you manufacture, design or supply products.
It covers the compensation costs.
Vehicle insurance covers risks on all the company’s vehicles. It helps cover property damage if your vehicle gets into an accident and is sued for damage.
Business Owners Insurance:
A very affordable insurance plan for SMEs can be the Business Owners Policy.
Business Owners Policy covers three essential insurance packages discussed earlier which are:
- General liability Insurance
- Commercial property insurance
- Business income insurance
This package is essential for every business and can help you manage risks effectively.