Why do you need business insurance
The first question you as a business owner will definitely ask is whether you need small business insurance at all. And the answer will be positive. However, no matter how rational it may sound to get business insurance, there are still certain common beliefs that business owners use in order to advocate against business insurance. You have definitely used these arguments as well when deciding whether you need a policy or not. And here are the three most common business insurance myths as well as a brief explanation why they are totally irrelevant to the real situation.
- Myth #1: Who needs to sue me? We're a small business and don’t make much money so we're unable to pay much if we get sued. It's not profitable.
FALSE. No matter how small your business or profit is, it won't save you from getting sued. Everybody and every legal entity can be sued and imposed to pay out the stated sum. Accounts and assets can be seized, equipment can be sold, wages can be garnished. You won't be protected from claims just because you're small. It doesn't matter much to the court or the entity suing you.
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Myth #2: We operate as a corporation and this form of business organization protects me from personal responsibility and liability. I don't need small business insurance.
FALSE. The corporate form of business organization really protects individual investors, owners and managers from personal liability in case the corporation gets sued. However, in virtually all states such a protection can be dismissed under certain circumstances, making individuals liable with their own assets and possessions. That means that you'll be responsible with your own house, car and valuables if the court finds your personal responsibility in the occurred situation. The rules regarding such circumstances vary from state to state, but the general rule is the smaller your corporation the more likely you will be personally responsible in the court.
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Myth #3: My death or disability won't harm my business much, because my family or partners will continue it.
FALSE. The statistics show that family members rarely continue the business of the deceased person and it is hard for the partners to substitute the missing member. Besides, there will be many death or disability associated costs that the business will have to deal with, which can finally dissolve it.
Once you understand that these myths are common beliefs and misconceptions you will realize that having small business insurance is a must, especially in the current shifting economical environment.
