In this article, we will state the importance of insurance to a small scale business. I have been asked on several occasions if it is a legal requirement to have small scale business insurance.
Well, the answer to this question is that it depends on the industry you operate in and your geographical location. If you operate in regulated industry then the answer is a resounding yes but you can right about do without small business insurance if your business is in a highly deregulated industry.
Don’t get excited if your kind of business is not required by law to have small business insurance as there are benefits to voluntarily having small business insurance.
The good news is that there are relatively inexpensive policies that can cover your enterprise from losses can be transferred through well calculated integrated risk management.
What is small business insurance?
Let us start by having a look at what small business insurance is. Without giving you any technical definition of small business I will explain in a plain language what small business insurance is.
The bottom line of any insurance policy is to re-instate an entity back to where they are before an event occurred. An accounting firm insurance for example will cover the firm from losing personal or corporate assets in the event that a client makes a successful claim.
Note that you don’t make profit out of the insurance companies. Small business insurance is not designed to make you rich but to help ameliorate sufferings so make sure you don’t try to make gains and thereby committing insurance fraud.
5 Importance of Small Business Insurance
It is a crime not to protect your assets as an entrepreneur. If you can pay for security guards to protect your physical assets at your business premises why can’t you do same for the intangibles and for hidden dangers? Small business insurance is likened to the invisibles that you only see in action when things go wrong.
Gives Associates Confidence:
Suppliers and big time customers tend to have this confidence in your entity when you have a kind of policy that takes care of the unexpected. You will be seen as a core professional when they know you are conscious of uncertainties.
Covers a Company from Employee Action:
There are times when things happen to employees like work place accident. A small business that does not have a small business insurance cover would end up paying huge medical bills and could even result in fine. By no means am I saying that insurance cover is a substitute for work place health and safety but it gives that extra bit of peace of mind that you got your back covered for anything.
Meets Legal Requirement:
A small business that is required by any law to have small business insurance will be saving on legal costs by having one. The importance of small business insurance to a small business goes beyond being compliant as it helps boost the reputation of the enterprise.
Improves Internal Control Systems:
Small businesses are forced into setting up an internal control system if they don’t already have one when they apply to take up small business insurance. The reason for this varies ranging from the desire to get cheap small business insurance to meeting the contractual agreement in the policy.
The size of your business is not an excuse for not having small business insurance as they not very expensive especially nowadays and the importance of insurance to small businesses are increasingly becoming clear that it doesn’t take too much of a hard work to realise it.