As a business owner, you have a lot of expenses, and to protect your profit margin, you may try to cut as many unnecessary expenses as possible. This is a sound business strategy, but you need to ensure that you don't misclassify an essential expense as inessential.
This is especially true for commercial liability insurance. To help you understand why this coverage is so critical, this blog explains what can happen if you don't have liability insurance for your business.
1. You may not be able to legally stay in business.
Some industries require you to have liability insurance. Without it, you won't be able to get or maintain your business licenses. Don't let a lapse in coverage destroy your ability to operate your business.
2. Not having coverage can lead to increased premiums.
Insurance companies take several factors into account when computing your insurance rate. They look at your business's risk factors for liability claims as well as your personal or business credit. They also look at your history of coverage.
A business that historically hasn't had commercial liability insurance can be perceived as riskier than a business that does have the coverage. Not having coverage makes it look like you make poor decisions in your business.
As a result, your rates may be higher after a lapse in coverage. This same rule also applies to personal policies such as car insurance.
3. A lawsuit can consume your business assets.
The reason that businesses invest in commercial liability insurance is to protect themselves from the financial effects of a lawsuit. Say someone gets hurt on your business premise or has another reason to bring a liability suit against you. If they win their lawsuit or even if you settle out of court, your liability insurance covers the claim.
If you don't have liability insurance, your business assets will be used to cover the claim. If you don't voluntarily use your assets to cover the claim, the courts have the legal right to seize your assets. Depending on the structure of your business, your personal assets may also be at risk.
Paying insurance premiums can seem cumbersome, especially if your business is on a tight budget. But the risks that come with not being insured are costly. To protect your business and your bottom line, you need commercial liability insurance.
To learn more, contact a broker. They can tell you about the benefits of these policies for your unique business.Share