By: Katarina Knoff
Businesses need business insurance because it helps cover a variety of necessary costs related to property damage and liability claims. It may seem like saving money to skimp on protection, but the long-term cost of being noninsured or underinsured can be detrimental. Without business insurance, business owners may have to pay enormous amounts out of pocket for legal claims or damages to their company.
There are a variety of scenarios where this can be financially devastating to a company, and when these situations occur, a business may never be able to recover. It is dangerous to go without business insurance. Below, we list some of the common types of coverages and risks that come with being underinsured in that respective area.
Dangers of Being Under-Insured: Workman’s Compensation
- Risk of lawsuits from workplace accidents
- Cannot provide lost wage compensation and medical care for employees hurt in workplace accidents
- Legal trouble if your state requires worker’s compensation insurance
- Irreparable financial harm to cover required expenses
Dangers of Being Under-Insured: Cyber Insurance
- Exposes your company to damages from cyber attacks and data breach
- Personal customer data can be stolen, for example, credit card information, social security numbers, health records, etc.
- Legal trouble if not compliant with state regulations
- Risk financial harm
Dangers of Being Under-Insured: Liability Umbrella
- Litigation arising from property damages
- Litigation arising from injury
- Legal defense costs if sued
Dangers of Being Under-Insured: Bond Insurance
- Default by the issuer by guaranteeing repayment of principal and sometimes the interest
- Company is less attractive to investors because of lower credit ratings
Dangers of Being Under-Insured: General Liability
- No coverage for bodily injury, including the cost of care and the loss of services
- No property damage coverage for the physical damage to property of others or the loss of use of that property
- Restitution for any death that results from injury
- Legal expenses out of pocket
- No coverage for products, equipment and operations
- Reputational damage due to libel, slander or copyright infringement
Dangers of Being Under-Insured: Professional Liability
- The risk to current and future assets
- No coverage for defense if a negligence lawsuit is brought against you
- No protection for professional advice
The bottom line – you need to protect yourself and your company. Call your local agent today and discuss what the right combination of coverages are for your small business.