Insurance is a unique product in that, unlike most products that come in physical form, is a promise. Business or commercial insurance, in particular, is a promise that should an event that causes financial losses happen to your business, your insurer is going to cover up the losses so your business can get on its feet again.
Commercial insurance is important for businesses in so many different ways, but some businesses still don't see the importance of purchasing these intangible products. Here are some key reasons why every business needs to purchase commercial insurance.
Insurance encourages businesses to take risks
For business managers or execs to take their businesses to greater heights of success, they should be able to take calculated risks. Commercial insurance gives businesses the confidence to venture into profitable activities or programs because they know that the insurer has got their back in case they suffer a financial loss. Hence, insurance encourages business managers to become risk takers, a key quality required to help realise the full growth potential of any business.
Insurance leads to increased business efficiency
Business managers that are constantly worried that they may incur big financial losses which will force them to close down business usually find it difficult to manage business operations efficiently. Purchasing insurance eliminates the bother caused by the uncertainty of losses. That way, businesspeople can dedicate their full time and attention to finding the best ways of catapulting their business to the next level of success.
Insurance helps protect personal assets
Every business needs to draw a line between business assets and personal assets. Otherwise, personal assets may be lost on account of financial losses incurred by the business. Insurance is particularly important for small businesses that often rely on some personal assets to boost their bottom line. When a business being run as a sole proprietorship is insured, for example, it will be protected from financial losses that may lead to loss of personal assets.
Insurance increases the credit worthiness of businesses
Before advancing credit to a business, creditors evaluate its credit worthiness first. Insurance provides businesses with some form of security in the event of financial adversity, increasing their ability to continue with operations over the long term. A business can secure a loan by using its insurance policy as collateral.
As the above points demonstrate, it is crucial for every business to purchase commercial insurance. If your business is not yet insured, contact a registered insurance agent or company to help you select a product that's right for your business.Share
12 June 2017
Hello, my name is Pete and I have recently started a very small company which is based in Sydney, Australia. Because I am just setting out, I have a lot to learn. For example, I got a big shock when one of my staff had an accident in the store and then tried to claim workers compensation. I suddenly realised that I had no idea about my commercial insurance arrangements. Thankfully, my brother-in-law, Dave helped me to sort it out and taught me everything I needed to know. I decided to start this blog to pass on some advice to others.