Importance of Insurance to Business

Being a businessman is hard enough, dealing with uncertainties makes it even harder. This makes buying insurance for your business a prudent choice. An appropriate insurance policy can shield your business and yourself from unwarranted and unexpected shocks, and help you and your business stay on track.
Continue reading to find out the importance of insurance to business.

Top 7 Importance of Insurance to a Business

• Keyman insurance
• Business stability
• Employee welfare
• Uncertainty reduction
• Liability protection
• Protection against lawsuits
• Ensures continuity of business

Keyman insurance

A keyman insurance policy provides protection against the death/disability of certain important company executives. For instance, a company can take a keyman insurance policy for their CEO, if something happens to him, the insurance company will furnish the company with the agreed compensation. The company can use these funds to hire a suitable replacement.

Business stability

The correct insurance policy can bring stability to a company in times of crisis. For instance, a company may have taken a fire insurance policy for their factory, and later suffers a fire incident at that same factory. Had the company not take insurance, their business would have been greatly destabilized. The compensation the company got was used to rebuild the factory and thus provided stability to the business operations.

Employee welfare

A company’s strength lies with its employees. It is the duty of the employer to look after the welfare of his employees. There are a variety of employee insurance products in the market catering to life insurance, health insurance, and beyond.

Uncertainty reduction

Business, by its nature, is uncertain. Insurance can provide a cushion of certainty in grave uncertain times. One should know which insurance policy to buy to reduce the uncertainties of business.

Liability protection

Liability protection is especially important to B2C businesses. There could be times where a customer gets harmed due to your business’s negligence or mistake. This aggrieved customer has the right to sue you for damages. A Liability protection insurance policy can come to the rescue at these times. It would be the insurance company’s obligation to pay the damages, not your company’s.

Protection against lawsuits

Corporate lawsuits can be an extremely expensive affair, and companies can face lawsuits from other companies, rivals, and even customers. Liability insurance can also shield a company against these.

Ensures continuity of business

A business needs to continue in the face of adversity. It simply can’t be expected to shut shop and wait till the storm blows over. Continuity is everything in business. Insurance can provide continuity to a business.

For instance, let us say a businessman bought marine cargo insurance to protect his exported shipment. Let us assume that the ship carrying his products met with an accident and all goods are lost. He now has the ability to raise a claim with the insurance company and recover the full value of the lost goods.

He can use this amount to further manufacture similar goods, this ensures continuity of business. Had he not taken marine cargo insurance, the businessman would be staring at massive losses and potential bankruptcy.