Small Business Liability Insurance: Yes or No?

The question we hear fairly frequently is this: “I’m not mandated to have small business liability insurance. Why should I spend the money on it?”

Far more frequently, we see business owners who do not have this important coverage or simply let it lapse. Usually, this is an attempt on the part of the business owner to save money in a tight budget situation.

In this day and age, and in this business environment, lawsuits are routinely filed over the seemingly most insignificant things, and running your business without liability insurance is like driving to work with your eyes blindfolded!

Trying to defend even the most frivolous lawsuit without this insurance can and does result in the death of a business, or at the very least its bankruptcy.

If you are concerned about the high premiums, don’t let it lapse! Be proactive about lowering the premiums.

Shop around to find the best company to buy it from. Look at exclusions and deductibles. Ask your licensed insurance professional to help you implement a risk management plan. And together the two of you can research your industry to figure out what the average claims and settlements might be and adjust your coverage accordingly.

This is a cost of doing business, and an important one. The importance of this coverage in order to protect your business from risk cannot be overstated.

Business insurance can offer you the peace of mind that your business can withstand a frivolous claim or the settlement.

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Small Business Liability Insurance

I’m not required to have small business liability insurance. Why should I spend the money on it?

Way too often we see business owners not putting liability insurance in place for their small business, or, allowing it to lapse. There a variety of reasons, but more often than not, it is to save money and cut costs. In today’s business environment and where lawsuits occur over the temperature of coffee served, operating without liability insurance is like skydiving without a parachute. Trying to defend a claim, legitimate or frivolous, without liability insurance can put a business into bankruptcy from this one event.

Business liability insurance can save the company ruin. In addition, it will allow the owner to maintain much more focus on running the business while the insurance carrier conducts the legal battle.

While this coverage is too expensive not to have due to the risk exposed, there are ways to reduce the premium and get the best value for the coverage. First, make sure to shop around and determine what is covered in each policy. Make sure to look at exclusions. Implement a risk management plan and review with your licensed insurance professional.

Research your industry and determine what coverage is necessary based on average claims and settlements. You may be able to reduce the liability limit and therefore reduce the premium. Take a look at whether you can combine coverage by utilizing a Business Owners Policy. This type of policy offers liability insurance as well as property insurance for your business. You can often add some coverage like business interruption to these policies. A Business Owners Policy is typically less expensive than purchasing policies separately.

There is certainly a cost involved for protecting your business from risk. Business insurance offers the owner peace of mind that the business they are building can withstand a frivolous claim or the cost of litigation. Having the proper small business insurance in place is one of the most important steps a business owner can take in protecting their business and themselves.

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