April 07, 2020
From space shuttle launches to local restaurants, businesses in every industry utilize insurance to protect their investments and cash flow.
Although the primary reasons to get commercial insurance depend on the values of each business, obtaining it is usually a wise decision overall.
Operating and growing a business often requires significant capital resources. Hiring employees, ordering stock, buying equipment, and investing in research and development isn’t cheap.
As a business owner, you need to maximize your capital to provide the best possible return on investment. Unless you are a large corporation (or in a unique situation), keeping millions of dollars in the bank uninvested, waiting to be spent on a large property damage claim or lawsuit has a massive opportunity cost.
Many business owners view insurance as a line of credit they can use to replace their damaged property, defend them in lawsuits, and pay certain legal disputes.
You pay a yearly, quarterly, or monthly premium payment for access to significant amounts of money so you can use your capital resources to invest in the business instead of waiting for a catastrophe.
Most businesses are not large enough to accurately predict the number of property or liability losses they will face each year. It is difficult, if not impossible, to develop long-term business plans and goals when a huge out-of-pocket expense like a property fire could cost you millions.
Being able to take the volatility of risk out of the equation (or minimizing it) lets you properly plan your business objectives around a more solid foundation.
Insurance doesn't just provide a way to minimize expenses for certain events. You often gain access to Fortune 500 legal resources, experts, and loss control to help you when you most need it by calling your broker or by contacting your insurance carrier’s loss control department.
Businesses often forget that when you buy an insurance policy, your problems become the insurance company’s problems.
Your risks become their risks.
They will often extend their vast resources to you to prevent future claims.
For example, many employment practices insurance policies come with free HR services to help you avoid employment-related lawsuits. This saves you and the insurance company money.
Additionally, you can often contact them with questions about how to handle certain situations and get advice that is in your best interest.
Everyone has seen the contractor vehicles that say "Bonded & Insured" on the side of them.
There is a reason they have that signage: It signals that they are a reputable and responsible contractor.
Even though you might not have a work truck advertising that you have insurance, you’re invoking the same principle when you give a customer your certificate of insurance.
Larger clients and projects often require proof of insurance as part of their company risk management program. They view your insurance program as a reassurance that there is money to back up your workmanship, as well as potential liabilities that could arise from your business relationship.
Higher limits suggest you have done other jobs of similar scope and size, but any high-quality insurance program suggests that you are a reputable vendor with the resources and experience to handle the job.
We’ve just described four benefits of commercial insurance, but there are many additional reasons why businesses elect to purchase it. If you have any questions about your particular business situation and want to talk to an expert, let us know or schedule a free risk consultation!
Not a LandesBlosch client yet? We're here if you need us. Schedule a free consultation to talk about your insurance with one of our insurance experts.