How Business Insurance Can Protect You During a Crisis

Small business owners sometimes overlook the importance of business insurance.

Rather than see it as the necessity that it is, they view it as something only larger corporations need.

Or they think other forms of insurance, like renter’s insurance for the building you operate in or your own personal auto insurance, will cover them.

In reality, 40 percent of small businesses will face a loss of property or liability that would require them to file an insurance claim in the next ten years.

If you’ve yet to protect your company with usiness insurance, keep reading to learn what it is and how it can protect you during a crisis.

What Is Business Insurance?

Business insurance, also known as commercial insurance, is designed to help protect businesses from a wide variety of threats.

Some of these are routine threats, like a small car accident between a delivery driver and one other vehicle.

Others are much larger, such as a loss of thousands of dollars or more in sales because of a natural disaster.

The most common business insurance claims filed each year include burglary and theft, water damage or freezing damage, and wind and/or hail damage.

Protecting your business against these routine claims can help you avoid paying costly repairs or replacement fees out of pocket.

How Business Insurance Can Help Protect Your Company in a Crisis

It is important to protect your business from the most common causes of insurance claims. But these are far from the only threats you should think about.

Business insurance can also help you protect your company in the event of a crisis, such as these:

Large-Scale Cyber Attacks

On average, each cyber attack costs businesses $200,000.

Whether you’re a large corporation or a small business, this average remains the same.

If you’re like many businesses, a $200,000 loss would be a financial crisis, if not enough to close your company for good.

A large-scale attack can lead to loss of revenue, require costly maintenance and repairs, and more.

Cyber liability coverage is one of the many business insurance options that companies need to protect themselves in the event of a large attack.

Natural Disasters

When a natural disaster strikes your city or town, homes and families aren’t the only ones who face losses.

The insurance policy you have on your business’ building will help you make the necessary repairs and replace equipment like computers or desks.

What it can’t do is help you recoup a loss of sales and revenue.

For instance, say that a tornado cuts all power to the plant where most of your products are produced.

This could cause a setback in production, which could lead to a loss of sales and important revenue, delays, and more.

Even if the plant or your business wasn’t damaged during the storm, you could still see losses that your regular insurance won’t cover.

Terrorist Threats

No one wants to think about a crisis like a terrorist attack.

But as a business, it’s essential that you protect yourself against all threats.

Even if an attack doesn’t affect your business directly, city-wide closures, an inability of employees to get to work, or a disruption to your supply chain could.

Massive Recalls

Another crisis that many businesses don’t think about until it is too late is the mass recall of popular products.

Product safety recalls have dropped considerably in the last couple of decades.

In fact, in 2019, they fell to the lowest they have been in 16 years.

But the hundreds of recalls that are announced often involve thousands, if not tens of thousands, of purchases.

While your business may not be at fault for the recall if you don’t produce the product, the recall can still have a devastating effect on your operations.

You’ll experience a drop in revenue without those products.

You may lose clients and customers as a result as well.

Add in the time and labor required to pull product, answer customer inquiries, and perform damage control, and even a smaller recall can have a far-reaching effect.

Business insurance can help you recoup your losses and get your company back on track faster after a recall.

Arson

Acts of nature, a recall, or a terrorist attack aren’t the only things that can put a stop to your supply chain.

Arson, or other acts of vandalism, can also affect your warehouses and suppliers.

While your commercial property insurance might cover replacing your warehouse, it can’t help fill the gaps in business and revenue that you experience as a result.

That’s why business insurance is important for supplementing your other insurance in case a crisis occurs.

Multi-Vehicle Collisions

Businesses that operate fleets have delivery drivers, or even just a few company cars often understand the importance of auto insurance.

But will that auto insurance be enough to cover a major accident?

In many cases, the answer is no.

Consider a semi-truck in your fleet causing a major, multi-vehicle accident.

Besides covering the medical costs of other drivers and passengers, your company may also face lawsuits.

Business auto insurance, with coverage for collision, comprehensive, and specified perils, will help protect your drivers and your business in case the worst occurs.

Choosing the Right Business Insurance for Your Company

Whether you want to protect yourself from cyber attacks, the effects of terrorist attacks, arson, or violent weather, or from a mass recall, business insurance can do all of this and more.

To get your free quote or request more information, contact us today.