Many individuals and businesses are in a holding pattern while waiting to see what happens with the economy in the next few months. Some companies are tightening budgets and preparing for a recession.
If you’re looking for things to cut from your expenditures, you might wonder if you need business insurance coverage. Paying for something you might not need when necessities require funds may not make sense.
Insurance When Money Is Good
When money is abundant and your company is profitable, it’s easy to understand and justify the necessity of business insurance.
The benefits of having insurance make sense when sales are flooding in. Business insurance provides peace of mind if you face an emergency.
There are several types of coverage included in most business insurance policies.
General Liability
General liability insurance covers a wide range of things you are responsible for. General liability will cover their injury costs if your customer slips on the ice outside your front door. It will also cover your legal costs if someone sues over a faulty product.
Property Damage Coverage
This type of coverage protects your financial interest in your property and belongings. For example, property damage coverage will cover your losses if a fire destroys your building. Additionally, if someone steals your business equipment, property damage coverage will help you repurchase the items you need.
Business Income Insurance
This type of coverage helps compensate for lost income following a covered event that makes it impossible for you to operate for a while.
For example, if you own a retail shop and it burns down, you won’t be able to have customers purchase items like they usually would. You would lose your income. Business income insurance would compensate you according to the terms of your policy and average income.
Commercial Car Insurance
Businesses that own or use cars to conduct business need commercial car insurance. Personal car insurance will almost certainly deny your claims if you file a claim and they find out you were using your car for work during that time.
Business Insurance In Financial Hardship
The exact reasons to have insurance when times are good apply to when times are good. You could even argue that insurance is even more critical when money is tight.
If business is booming, you can recover from losses, but when things are slow, you’ll have a lot harder time recovering from losses. In fact, insurance may be the only way you can bounce back after a loss.
Saving Money on Business Insurance
While tight economic times may not warrant canceling insurance coverage, it should spur you to seek cheaper options. Paying lower insurance premiums is one way of reducing your business costs.
Getting Lower Premiums
Comparing business insurance quotes is just as important as comparing personal lines of insurance like home and auto insurance. The size of your business, risks, and business practices change over time, and what was the best fit for insurance five years ago may not be the best anymore.
Comparing quotes can help you identify whether you’re overpaying for coverage. Sometimes, business owners get into the routine of paying for business insurance and neglect to look into all the options.
Reducing Coverage
While eliminating coverage isn’t a good idea, you may decide to trim back on coverage to stay operational.
General liability coverage is the most essential coverage and should be your foundation. However, you could increase the deductible so you pay lower premiums. It may be easier to come up with extra money for a deductible if you need it than pay higher rates every month.
You may take a risk and cancel business income insurance. Maybe your company isn’t at a high risk of needing this type of coverage. In that case, you could cancel coverage and reconsider when the economy bounces back.
Regardless of the economy, insurance for your business is a must. However, it’s wise to save money when you can and look for a balance of protection and affordability.
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