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Small Business Insurance Advantages & Disadvantages

Small Business Insurance or also called as commercial Insurance protects Business assets, property and income from a variety of risks.

Small business insurances safeguard the firms from perils of theft, property damage, accident, fire or injury.

Small Businesses need Insurances to

  • Retain employees
  • Gain credibility
  • Business contracts
  • Lawsuit coverage
  • Liability protection
  • Copyright security

Like each insurance, small business insurances too has its pros and cons.

Small Business Insurance Advantages & Disadvantages

Advantages of having a Small business Insurances include –

1- Risk Management
2- Employee protection
3- Lawsuit coverage
4- Peace of mind
5- Customization
6- Flexibility
7- Investor appreciation
8- Loans
9- Client satisfaction

With the help of small business insurances, a business owner can focus on its primary functions with security. A small business owner needs to protects its assets and cover the liabilities to control risk effectively. Once, the risk is reduced the profit can be easily optimized. It also helps in ensuring employee protection by safeguarding them against injuries, health issues or accidents. This not only protects employees but also retains them for a longer period. The insurance also covers any kind of lawsuit charges that may pertain during the time of disaster, calamity and uncertainty. When the company is fully insured it also reduces the stress and gives a certain peace of mind to both the owners and the employees. The insurance can be customized based on the needs, functions, number of employees and risk of the company.

The policies are sound and practical. Each policy is unique from the other. The coverage, premium, discount may vary from one another. Insurance also gains investor trust and appreciation since he is also secured against the risk of the company. It’s easier to seek a loan when the company is insured for its risks, it also gives credibility to the company which helps in retaining older clients and attracting nee clients. You can also bundle the policies and select what suits your company. The most common small insurance bundle is the Business Owner’s Policy which combines general liability and the property liability policies.

As a small business owner insuring your company has many benefits but this investment also comes with a few cons that are as follows –

1) Extra cost
2) Expensive
3) Extra hassle
4) Less responsive
5) Conditional
6) Lower claims
7) Fraud
8) No extra facility like banks
9) Covers shorter duration

Taking a small business insurance can be very heavy on the pocket. Most business find it difficult to retain their profits hence taking an insurance is an extra expense in the accounts which sometimes is very expensive for the small businesses to pay. It is also a hassle to deal with the claims and premiums from time to time. Its an additional task for the company. Also, many of the insurance companies are biased against smaller insurances which leads to slower responses at the need of the hour an also due negligence.

Insurances are not always safe, the cases of frauds in this market have only shown a steady rise. The insurance companies do share the risk but they do not provide any additional benefit of investment like a bank. The duration covered is also very short and very often the claims are conditioned based on the variety of determining factors like location, size, number of employees etc. Sometimes, the total amount of premium might be higher than the policy amount.

So the small business insurances have their own pros and cons but one must insure their products and services and manage the risk of theri company in whatever way they can.

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