The 21st century has witnessed a meteoric upscale in personal business with more people welcoming the idea of startups. While running a startup can be hugely successful, it comes with its own set of inherent risks. For perspective, a client could file a suit, or a natural disaster can ruin things, or someone can get injured on the site. It is thus essential that a business advocates the use of having an insurance policy in place to protect itself as well as its assets.
Many small businesses are on the fence about whether they should buy business insurance or not. In such a scenario, one should make sure to learn the advantages and disadvantage of opting for business insurance.
BENEFITS AND DRAWBACK OF INSURING YOUR STARTUP
|Employee satisfaction and security||Limited scope|
|Protects business products||Cut-off point|
|Protects business vehicles||Costs Money|
|Aids in risk-sharing||Denies Claims or Pays Slowly|
|Promotes foreign trade||Adds extra expense|
|Promotes business continuity||Rising premiums|
ADVANTAGES OF INSURING YOUR STARTUP
• Employee satisfaction and security
It helps gain the goodwill of an employee who gets happier knowing that there is an insurance policy that could be used in the event that they need health costs covered. It also protects against paying out employee expenses during the days they are away as a result of a personal injury.
• Protects business products
An inventory of products is one of the main assets of business and it would be disastrous if the storage unit that contained the majority of stock got ruined due to some mishap destroying all the producst within. An insurance plan that covers product damage, can protecting your business against such scenarios.
• Protects business vehicles
It brings the entire fleet of business vehicles protected under one insurance plan. The insurance is tabulated by the type of cars in the fleet and their depriciation among other factors. Such an insurance type ensures that the owner will not have to dish out a lot of money if many vehicles broke down in a short period of time.
• Aids in risk-sharing
The biggest benefit to business insurance is that it can save you money if you need to file a claim.
When a company makes losses, the insurance company can come to the rescue. In an event where some business hits severe misfortunes, it may not be able to solely afford the cost of getting back on track and running again. But if the business has been insured, the risk is shared between the company and in the insurance company.
• Promotes foreign trade
The international trade of the country can be shaped brilliantly by encouraging to shifting of risk to insurance company. If there has been any damage to the assets of the company, insurance is one of the devices by which these risks may be reduced or eliminated. Thus industrialists and exporters devote their full attention toward the promotion of business which in turn increase the export activities.
• Promotes business continuity
If an unforeseen event hit a company, and if the company does not have an insurance policy in place to help protect against such event, it may lead to the end of the business if not properly managed. But the presence of a business liability insurance can reduce and minimise risks so that the business continues to operate normally without taking a hit.
DISADVANTAGES OF INSURING YOUR STARTUP
• Limited Scope
At times, some business insurance plans can be limited with regards to the number of things that they cover. Let’s consider that a batch of products got damaged while being delivered from the warehouse to a store, but it could be the case that your insurance plan does not cover transportation damage.
The business insurance plan hence must be looked at carefully to make it has the coverage that is needed.
• Cut off point
One of the major drawbacks of business insurance is that some insurance plans will only pay out money up to a certain point, after that you will have to pay the difference. Therefore, it is extremely important to be familiar with all the terms and conditions.
• Costs Money
One of the biggest downsides to commercial business insurance is that it is another expense. It costs money, and odds are, you will never end up needing to use it. As such, if money is really tight, you may want to gamble and play the odds and not obtain this type of insurance
• Denies Claims or Pays Slowly
Since business insurance is confusing with many types of policies, a claim may arise that the company’s policy doesn’t cover. Apart from that, claims take time to process because insurance companies need to determine the damage and assess an accurate accounting of loss. The time and energy required can be frustrating and might end with unfavourable outcomes for the business.
• Adds extra expense
Business owners are constantly examining budgets and looking for ways to save money and insurance can be expensive. Construction business policies are more expensive than policies for accounting offices.
• Rising premiums
Most types of insurances have varying rates of premiums, and one should very careful about it before buying a policy. It is important to make sure you know from the beginning if you have a guaranteed premium throughout the policy, or if it changes from time to time in relation to inflation.
While it is more or less up to the owner’s discretion to choose what type of insurance the start needs, be aware that many states do require employers to have insurance protecting their employees. In doing, so one will be in a position to make an educated decision on the type of business insurance that will best suit your company.
Thus, whenever someone is opening a new business insurance policy, it’s important to check local regulations to be sure that your plan will be compliant.
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Business, marketing, and blogging – these three words describe me the best. I am the founder of Burban Branding and Media, and a self-taught marketer with 10 years of experience. My passion lies in helping startups enhance their business through marketing, HR, leadership, and finance. I am on a mission to assist businesses in achieving their goals.