Involving in a business means carrying a good deal of risks. Although contemplating facing worst-possible scenarios may seem to be scary, it is vital to comprehend the possible repercussions of not investing in needed business insurance simply to save some funds, says Charles Spinelli. Many startup businesses to SMEs often wonder about the necessity of business insurance, while the negligence of getting equipped with insurance can expose a business to sizable financial setbacks, and legal complications while damaging the image of the company to its stakeholders. Keep reading to consider the real-world consequences of not opting for business insurance.
Financially Devastating from Lawsuits
One of the major consequences, a well-operational business can experience is being sued. Without having business insurance, a business is supposed to carry all legal expenses and even pay for settlement money out of their pocket. Legal disputes can occur from different factors, for instance, injuries sustained by a customer in the business place, defective products, claims due to carelessness, etc.
Especially for startups or small businesses a potential lawsuit can affect the bottom line of their financial health. For example, if a business is being sued for personal injuries by a customer and lacks liability insurance; it will be obligated to carry all consequential expenses toward medical bills to damages and legal costs, which can potentially go beyond its capacity.
Unavailability of Contracts or Funding
Many large-scale firms or government offices require businesses to carry suitable business insurance before they sign any contract or work with them. A business tends to forgo lucrative chances or fail to obtain financing as needed for further expansion without sufficient insurance coverage. Investors and lenders would feel assured that the money they offer is safe, while its lack may often imply poor risk management. Businesses should make sure to get coverage of needed insurance to build confidence in their stakeholders.
Employee Injuries and Compensation Claims
For businesses with workers regardless of their size, purchasing worker’s compensation is a legal obligation. This can prevent a business from paying legal claims for necessary hospitalization, and medical care apart from lost wages in the event an employee become injured or gets ill while on the job. It can also lead to litigation making the employer pay huge compensation to meet settlement claims says Charles Spinelli.
On the other hand, the violation of the law for not having worker’s insurance coverage can result in facing a significant penalty in the form of fines to even criminal punishment. Staying compliant with the law and investing in worker’s compensation law helps boost employee morale and business productivity.
Property Damage and Loss
Accidents occur, be it a fire, earthquake, flood, cyclone, or burglary. In the absence of property insurance, a business would have to incur costs associated with replacement, repair, replacement, or rebuilding the property. Property damage and loss are common experiences and they are unpredictable. This kind of damage can take a major toll on the financial health of a business and can be destructive for its sustaining or further growth due to the absence of property insurance.
Having commercial property insurance not only helps businesses to get coverage of all costs for replacing and repairing of assists, and loss for business interruption but also strengthens its reputation to investors, customers, and lenders.
To conclude, if buying business insurance seems to be unwanted, it is time to think twice. Not having needed insurance exposes businesses to greater risks. So, get in touch with an insurance consultant who can help get the right mix of business plans suitable to the unique risks, volume, and location of the establishment.