When it comes to running a small business, there can be a lot to think about. If you are the sole proprietor and worker or instead, you have any number of staff, the responsibilities of leadership are still demanding. With so many potential hazards, it makes sense to plan for as many eventualities as possible. Part of this is considering the best insurance options for your business. This guide explores whether general liability insurance is important for small businesses.
What is General Liability Insurance?
General liability insurance exists to protect businesses against external factors such as claims brought against them, client or worker injury, property damage, and medical or legal costs. You can learn more here, but the general idea is that a business takes out a policy so that they are covered in case random accidents or events pose a threat to its integrity, finances, and functions.
Reasons Why General Liability Insurance is Useful
There are three key areas that make general liability insurance useful for small businesses. These are explored in more detail below.
Protects Against Claims
Accidents can happen at any time for any reason. If your business is involved whether it’s something broken in a client’s house, or a trip in your store, you do hold some liability. This makes you vulnerable. If someone claims against you, there will be monetary losses and your reputation may be damaged. To protect against claims, and therefore legal fees and any compensation payments, insurance is the best option. You pay an annual fee for your premium and then you are protected in line with the terms and conditions of your policy.
Small businesses rely heavily on their reputation to bring in new clients and establish relationships or interest in the wider commerce environment. Therefore, to take a hit to the reputation owing to a compensation claim or worse has the potential to be catastrophic. It is easy to trash talk a business online through social media and review sites. One incident could mean negative press and detrimental write-ups that will be so hard to recover from. Because reputation is so important, it must be protected. The right insurance policy will make sure any reputational damage won’t go further than the surface and that finances don’t sink under too.
The Difference Between Closure and Staying Open
Finally, it could make the difference between closing your doors for good and managing to stay open. Trading depends on a steady stream of income. When that income and profit stream is interrupted, regardless of the reason, it causes a rift in your capacity to maintain operations. Therefore, some as major as a compensation claim brought against you might costs thousands, even tens of thousands in the wrong circumstances. This kind of fee can be devastating and lead to forced closure to offset the fees. Insurance protects against this and enables better practices generally so that if something were to happen, you wouldn’t have to give up your business to recoup the loss.
General liability insurance is important for small businesses (and big ones too). It makes sense for any company owner to protect themselves, their workers and their clients too that they engage with.