Risks are inherent to successful entrepreneurship, and many successful business owners have taken calculated risks to get to where they are. While some risks are acceptable, other risks can seriously impact your business and your reputation. The best way to protect your business and your employees against these types of risks is to buy the right type of insurance.
Four Major Risks of Operating a Business Without Insurance
Here are some of the risks of operating a business without insurance:
Product and Professional Liability
Whether you own a law firm or are an electrician, your clients expect you to deliver flawless professional services. Any minor or major error or omission that you commit while offering your services can attract lawsuits.
For instance, a client can file a claim against a doctor for a wrong diagnosis that resulted in prolonged hospitalization. Without professional liability insurance, fighting the lawsuit can mean huge out-of-pocket expenses. These costs relate to medical expenses, attorney fees, and cost of settlements and judgments, which can cause a serious dent in your business’s finances and impact your profit.
If you manufacture products, product liability insurance is a must-have. This type of insurance covers you when a client or third party makes a claim of property damage or bodily injury as a result of your product. For instance, a client may claim that they suffered eye damage as a result of a defective design of sunglasses that failed to protect against ultraviolet rays.
Property Insurance
According to the NCEI (National Centers for Environmental Information), natural disasters and weather events resulted in $80.2 billion worth of damage each year between 2010 and 2019. Fires caused property loss of up to $14.82 billion in 2019.
A business usually entails a long list of inventory. Based on the nature of the business, this can include computers, desks, heavy machinery, supplies, and other equipment, apart from the office building. From severe weather conditions such as hail or floods to theft and vandalism, your business property faces significant risks of damage or loss.
Property insurance can include several specialized insurances such as fire, earthquake or floods.
Cyber Risks
From hackers to malware, data breaches to viruses, the cyberworld is full of hidden and visible dangers. The cost of fixing cyberattacks and restoring business continuity can be prohibitive. Cyber-Liability and Information Security coverage protects businesses against cyber-related incidents.
Business Interruption
A disaster such as a fire in your office building or flooding of streets where your office may be located can cause the closure of business, causing interruption of business activities. The recent coronavirus pandemic proved how sudden and unexpected business closures can be.
Thumann Agency has a comprehensive Business Owners Policy that covers business interruption along with property and professional liability.