Insurance is one of those things people sometimes believe they can’t afford—until something happens and they wish they had it. This is why so many businesses are uninsured or underinsured. This happenstance can be really tragic, particularly in light of all of the natural disasters we’ve seen recently.
According to Moody Analytics, the total estimated cost of rebuilding in Houston and Florida could be as much as $200 billion, and much of that is for destroyed or damaged small businesses. With risks like those becoming increasingly frequent, getting annual business insurance quotes should be standard operating procedure for SMBs.
In a word—risk. An uninsured business is a prime target for fire, an employee accident, theft or lawsuit. any one of the above could decimate your operation. In certain instances, you’re actually required to have insurance by law. Workers’ compensation is a good example of this—most states require employers with more than a handful of employees to have a policy.
Further, depending on the nature of your craft or profession, contractors and vendors might require you to have certain types of coverage before they’ll do business with you.
Still, expense is the most often-cited reason for operating without insurance. However, doing so in the event of a tragic incident will be far more expensive than purchasing insurance would be. You could lose your livelihood altogether.
What’s more, entrepreneurs often overestimate the expense of small business insurance. Packages like Business Owner’s Policies provide property and liability coverage at rates more reasonable than you might expect. And, if that’s still more than your budget will allow, you always have the option of carrying a higher deductible. This will shift some the liability back to you, but it will be far less than if you were uninsured and suffered a tragedy.
In addition to carrying higher deductibles, you can execute a dedicated risk management program to make your operations as safe as possible. Insurers acknowledge these efforts with lower premiums. Implementing a risk management program also requires you to look at each specific area of your business to evaluate the degree of risk so you can cover it adequately. Seeking opportunities to eliminate risk altogether means you’ll have fewer liabilities and therefore lower rates. Doing this on an annual basis also reduces your potential for filing claims, which will give you a favorable claims history, qualifying you for renewal discounts.
Ultimately, the primary reason so many businesses are uninsured or underinsured boils down to a lack of good information regarding the cost of adequate coverage. Implementing the suggestions above and diligently maintaining them will earn you highly favorable business insurance quotes.
Furthermore, it’s a good idea to seek new quotes on an annual basis—or even biannually—and every time your business undergoes change. Use CoverHound today to get free quotes from leading insurance carriers.