5 Reasons Your Business Needs Insurance

Many small businesses make the mistake of thinking they don’t need insurance, or they believe it’s not all that important. This is more of a problem with small business owners and sole proprietors, particularly when they’re first getting started and they don’t have employees. After all, what kind of risk does an Etsy crafter or web designer actually have, right?

The reality is, all businesses need at least basic commercial liability insurance, and most benefit from a variety of other coverages too. Without insurance, both the company and you, its owner, could be held legally and financially responsible for a number of things. These risks can cause major setbacks for any business, and sometimes they can cause outright bankruptcy and failure. That is why it is advisable to get a range of insurances perfect for your landscaping business to eliminate these risks.

So let’s look at reasons why you need commercial insurance coverage, and see what types can benefit each situation.

Since the launch of Etsy in 2005, thousands of women have started handmade stores online. Some make simple craft items, some create artwork for hanging on the wall, and some create elaborate needlework on demand. As a professional crafter, you may feel you are not large enough for insurance, or that what you do doesn’t need to be protected in any way. This is far from the truth. Customers sue companies for any number of reasons, and commercial business insurance is designed to help you survive many types of lawsuits.

A quilting company may sell a handmade quilt to a customer, for instance, and later be sued for property damages because the customer’s washing machine broke when they tried to wash the quilt. Whether the quilt actually broke the machine or not doesn’t matter much, because you will still have to pay for the costs associated with defending yourself. If the case goes to court and you are found at fault, that’s added expense as well. Without insurance, you pay for these expenses out of pocket. 

With a general liability insurance policy, those expenses would be taken care of by the insurance instead. And sometimes the insurance company can help resolve the issue by coming to a settlement instead of going to court. General liability insurance covers several different types of problems, including property damages, bodily injuries, and advertising injuries. 

Online service businesses are becoming the norm in recent years, and include SAAS (Software as a Service), Graphic Design, Social Media Management, Consulting, and VA (Virtual Admin) services among many others. Whether you run your online service business as a sole proprietor or you have employees around the world, there are common and unique risks you should be aware of. 

A SAAS company or graphic designer may be accused of damaging a customer’s computer, for instance, or causing critical file corruption. Social media managers may be blamed for a customer’s account being restricted, banned, or hacked.

Customers sue companies for endless reasons and operating solely online does not save you from this potential risk. Even if you do not deliver physical products that might be able to cause bodily injuries, you are accessing and interacting with content and devices that are property and can be damaged. Even when you are not at fault, the insurance coverage can help resolve the issues.

Companies that sell products directly are always at risk of being blamed for problems with the products. This applies to online e-commerce stores as well as physical storefronts, and it doesn’t matter if you make the products yourself or if you source them elsewhere. When products are defective, companies that sell them can be sued. You might run an online pet store and discover that a popular pet toy is being recalled due to choking hazards. Regardless of how quickly you pull the product and inform your customers, your company may get sued by someone who has already encountered the problem. You might even be sued by someone who hasn’t had any problems at all. In either case, you’ll have to bear the expenses involved with managing the lawsuits, dedicate the time to them, and so on. With proper commercial insurance coverage, however, that policy will take care of these headaches and expenses for you instead.

It’s a given that business risks are higher when you have a physical location that customers and clients can go to in person. Accidents happen, and the more foot traffic a company has, the more likely it is to have claims made against it.

You might run a small photography business for example, and have clients come to your studio. If a client were to trip on one of your cords and injure themselves, they would expect you to pay for those injuries. Even if someone is just outside your studio and they trip on the sidewalk they will expect your company to pay for any medical care that's needed, and even rehabilitation when the injuries are serious.

Advertising is the lifeblood of any business, right? But believe it or not, even advertisements for your own company can sometimes get you in hot water legally. If one of your ads compares your services against a competitor, that competitor might decide your ad was a form of slander or defamation. Your ad could be completely neutral and factual, yet still, generate a lawsuit. Advertising and personal injury claims like this arise from advertisements, but they can also spawn from social media posts and other online comments. And if your company does not carry general liability coverage, you’ll be left to deal with the fallout completely alone.

Commercial insurance helps protect you from these types of lawsuits, by paying for the costs of legal representation, paying judgements leveraged against your company, and paying settlements that are made out of court.

General liability business insurance provides coverage for bodily injury claims, property damages, advertising, and personal injury claims, among others. Depending upon your specific business, you might also benefit from business owners’ insurance, worker’s compensation, and commercial auto insurance. If you're living in California or planning to reside in that State, you can also check out some insurance companies that offer general liability insurance in California for some assurance.

Everyone's business is different, but the modern world poses problems for all of us. Whether you run a million-dollar hedge fund or a simple vintage Etsy shop, there are always risks involved. Even when working from your home office and never having direct contact with customers or clients, there are still risks involved in running your business. These risks can be mitigated with commercial business insurance coverage, regardless of how large or small, your operation is.