Is insurance necessary for the businesses?

Discussion in 'Growing and Managing a Business' started by rodsmith, Jun 30, 2015.

  1. rodsmith

    rodsmith
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    I have a business and I really want to know what advantages I will get if I have insurance for my business property?


    Please advise me on it asap.
     
  2. tsubibo

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    Depends on what business you are in? Which exactly is your business? If it is a service based business then I would definitely say that you need insurance.
     
  3. Joseph.Shivell

    Joseph.Shivell
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    There are various different types of insurance, depending, as tsubibo said, what kind of business you are in. If you have a service business that requires visiting a client's home or business, you need liability insurance in case something should happen to the location because of something your technician did. You will also need insurance for the techs themselves. if you have a physical location, and/or equipment/furniture you use in your business, you will need property insurance to protect against damage. More details would allow us to give you more detailed help.
     
  4. Business Attorney

    Business Attorney
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    In most cases insurance is not mandated by law, but it is always a good idea to evaluate your insurance needs with a professional. In some cases (workers' compensation if you have employees, malpractice if you are a doctor, etc...) there are statutory insurance requirements. In those cases, you are not only taking unreasonable risks, you are also violating the law.

    In other cases, such as property and casualty, general liability, etc... it is merely a matter of making wise choices. Why risk your entire investment in the business and even your personal assets if you have a catastrophic loss in your business?
     
  5. Elysium

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    It really depends on what you can afford as well, however I think for all business it's best to have insurance. It's just like asking if having renters insurance or car insurance is necessary. Sure, it can be a hefty cost depending on what you get and how much you make as a business, however it cannot be as bad as not having insurance and having something happen. I personally think this falls under the "better safe than sorry" ordeal.
     
  6. Sotaru

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    Insuring your business is a serious step when it comes to taking your business to the next level. Before you insure it you need to consult a lawyer and get down the nitty gritty details of how much it will cost to get the insurance versus the benefit of having it. You should also decide whether or not you truly need it based on what type of business you have, so keep that in mind.
     
  7. david14beck

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    It is not necessary to have business insurance but it is very useful.it helps our business from bankruptcy, Deed of company Arrangement, Administrations, Receiver Manager, Liquidations and other financial losses. so its a great decision for every business owner while smal or large.
     
  8. rodsmith

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    Thank you all for your prompt replies and for guiding me. I will definitely keep these things in mind.
     
  9. pwarbi

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    The problem with any insurance is while it can be expensive, can you afford not to have it? A lot will depend on what sort of business your running and what physical assets you have. If you have to rely on certain things to keep your business going then it's sometimes better to just pay the insurance, factor it into the cost of running your business and adjust your figures to cover it.
     
    #9 pwarbi, Jul 1, 2015
    Last edited: Aug 25, 2015
  10. clevelandslim

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    You may have to secure insurance to guard your assets. A few types of policies are common for many businesses, but before you assume it's a requirement, you should consult with a lawyer or insurance agent for details about your specific situation.The type of business you run determines the necessary of insurance.
     
  11. gradetracy

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    I guess, you should get consulted at some law company like the linkagemind one. I've used their help too for my business, they are real professionals, they helped me a lot. My personal opinion is that insurance is really vital for every business.
     
  12. Corzhens

    Corzhens
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    Yes is my answer to the thread title. Especially if you have a big investment in your business, you need insurance to cover your assets in case something goes wrong. Office furnishing and equipment would cost a lot and to include the vehicles, it would be a big loss when a fire destroys all that. So maybe you just have to include the insurance premium in your overhead budgeting.
     
  13. backpackstatus

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    If it is a service based business that has the potential for personal injury, definitely get insurance.

    If it is a service based business and you therefore have tangible assets, definitely get insurance.

    If it is an online company where you have no physical (tangible) assets, then there is no need for insurance.
     
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  14. Ted

    Ted
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    Rod,

    If your business has considerable assets then yes you want insurance.

    If your business has almost no assets, then you don't necessarily need insurance. You would definitely want to make sure you incorporate the business or at least form an LLC. That way you are personally insulated from lawsuits filed against the business itself. When a business gets sued, the other party is trying to take the assets (or a portion of those assets) that belong to the company. So if the company has no assets or less than $10,000 in assets and the assets are mostly liquid, then it might not make sense to pay the cost of insurance to insure them.

    You might consider getting a personal liability rider on your existing insurance policy (auto insurance for example) that offers a much higher coverage in case you ever get sued for more money than your existing insurance policy would cover. If you use a vehicle for business purposes, then you really should look into that rider. It is a much cheaper way of getting a lot more coverage than buying a commercial liability policy.

    I speak from experience on this topic.

    If your company has no insurance and it is ever involved in a lawsuit (like a car accident for example), then it will cost you a huge amount of money out of pocket to defend your company in that lawsuit. By the way, lawsuits in the US are far more common than you probably realize. If you are in business long enough, you will get sued for something. Yes that is even true if you operate a completely honest business and stick to completely ethical business practices without question.

    So if you have no insurance, and you get involved in a lawsuit against you, then it will cost you anywhere from a small fortune to a large fortune to fight the lawsuit.

    If your company has almost no assets (no property of any significant value and little money in the bank) then the most the plaintiff could get from your business is whatever assets the business has. This is the whole reason behind corporations and LLC's. This is why they exist.

    The best thing you can do if you don't want to carry commercial liability insurance is to make sure you keep very little money in your business bank accounts. Keep just enough in there to run your business. Draw the rest out as owner equity as it builds up.

    Hope that helps.
     
  15. Damien Lee

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    If you have a very small business that is barely profitable and are therefore on a tight budget, don't even consider an insurance right now. On the other hand, if you've got a somehow mature business that's profitable you should definitely consider getting insurance. Particularly if you're in a field where you're exposed to many risks. Always look out for an insurance where you'll be able to get some of your monthly premiums back if you don't make a claim.
     
  16. pwarbi

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    Another point to consider regarding insurance is the actual funding of your business. Depending on the country, if you ever require additional funding such as a business loan from a bank, they won't touch you or agree if you can't prove your business is covered.

    While that might not be an issue you think about now, it might be something to bare in mind in the future though.
     
  17. Nox

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    I think your starting point when faced with this question is really understanding that insurance is not an arbitrage, but a hedge position; meaning you are protecting yourself and the business against specific events that could significantly affect your cash flows or even the survivability of your business. There are different types of insurances, all with different levels of cover, many insurers now tailor your insurance to your specific business needs. You need to decide on what resources are the most important to your business, and how much of a knock you would take should you have to repurchase these resources again. My advice would be to consult with a broker and also observe what the industry norms are in your area of business with regards to insurance practices.
     
  18. Augustus Martinez

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    Bad things might happen to the most conscientious business owners. That is why you need insurance. Even if you have a small business, you still need to have a business insurance. Especially when you have a big investment on your business. So, if anything happens, your business is protected to any losses.
     
  19. jawal

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    Hello!
    Insurance is mandate for all the businesses except online business like there is no office only one person is working at home, remaining all the business should have Insurance but my suggestion take the insurance from Government related companies like LIC like that, before taking insurance take the reviews from the customers then approach the company. Now a days good thing is some online websites offering Insurance comparing. So first check with that and then proceed.
     
  20. Alika Cooper

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    Yes, according to my suggestion insurance is necessary for the businesses because it helps in minimizing the risks associated with unexpected events, liabilities, and losses. Insurance requirements vary according to the type of business you are operating. In order to protect various assets and business from potential risks, you require insurance.
     
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