Business Insurance: An Investment in Your Company or Just Another Bill to Pay?

The business insurance payment is due again. Every time it's due, you stare at the bill, reluctantly write the check and wonder if it's really worth it. Well, you know the old saying about never needing something until you throw it away? I can almost guarantee that business insurance will be the same way. Business insurance is one of those things that is absolutely essential, but which you hope to never use.

Business insurance is a general term that refers to several types of insurance products. Companies are normally interested in liability insurance, property insurance, and assets and equipment insurance.

Liability insurance probably doesn't need an explanation. Hardly a day goes by without news reports of a company being sued for damages. There seems to be a class of people who are looking for ways to score a large settlement from the "deep pockets" of a big company. Of course, real damages and injuries do occur and businesses are liable in some cases.

Liability coverage is business insurance that protects your company if someone is injured or property is damaged in connection with your product, service or place of business. Injury and damages can cost your company money in several ways. Property must be repaired or replaced and victims of injuries may need medical care. There will also be fees and expenses for investigating the incident. If things wind up in court, there will be legal fees (regardless of who is at fault). Also included in this type of business insurance is product liability insurance. Product liability insurance covers you in case a product you made or sold causes injury or damage.

Property insurance is a type of business insurance that no company can do without. Even if your business is small, you have property that needs protection: buildings, office furniture, office machines and more. If you're selling a product, you probably keep inventory on hand. All of this business property is at risk. It could be stolen in the dark of night, damaged in a raging fire, ruined in a sudden flood or completely swept away by a violent storm. Property insurance can provide for the repair or replacement of these essential items. In addition, some policies include coverage for lost business while things are being put back together.

Companies that have facilities with manufacturing equipment or use mobile equipment like trucks or construction machinery will probably need a separate equipment policy. You should also consider a certain type of business insurance known as "equipment breakdown" insurance. This kind of policy will cover the repair or upgrading of essential business equipment and may also reimburse you for lost profits while the equipment is down.

Business insurance may feel like a cost when you pay the bill, but it's really an investment in your company's security. Think of it this way: business insurance is a tool that you can use to transfer the risk of loss away from your business to an insurance company. You need to protect what you've built from the unforeseen events of the future. There is simply no way to predict what could happen tomorrow--unless you happen to be a fortune teller. And then who's going to protect your crystal ball?