Introduction About Insurance
The term insurance is popular and has great importance in the lives of business owners. This article focuses on answering questions like – what is insurance? Is insurance needed for small business? Types of insurance and some more details about the subject.
However, insurance is a wide subject which cannot be entirely covered in a single article. I will try to highlight some most important aspects of insurance in this article.
So, without any delay lets understand the saviour of all businesses.
What is Insurance?
Insurance helps the business against any loss caused by natural calamities, burglary or accidents. It is said to be the primary source for risk management sought by the businesses.
Let us now understand how insurance works.
Basically, there are two parties entering into a contract. The service provider is known as the insurer, insurance company, underwriter or insurance carrier and the one who is availing the services is known as the insured or policyholder.
You would now think how does monetary aspect of the insurance works.
So, there is sum agreed by both the parties depending upon the value of assets. This amount is the highest that the insurer will bare in case of any loss. On the other side, an amount is charged by the insurer to the insured at regular interval which is known as premium.
In case the company suffers any loss, the insured will submit the claim to the insurer. At this time, the insurer will check if the loss meets the protected areas in the contract. If the claim submitted meets the contract, they will pay as agreed.
There may arise a question in your head now, is insurance needed for small business? Let me tell you that insurance is important irrespective to the size of business. However, have you ever thought why insurance is needed for small business?
Let us have a look at some important aspects of insurance for small business.
1. Mandatory as per the Law: According to the law, the business that has employees needs to be secured with insurance. This insurance includes workers compensation, disability and compensation, and many more. Any business failing to abide the law can be fined by the government which can even cost more than the insurance.
2. Legal litigations: There may arise a situation where the business can be sued. It just requires one abnormality and the job is done. It is always better to protect the business rather than risking it to legal litigations.
3. Increases credibility: A business covered with insurance has a positive impact on credibility. Your clients and customers will get an impression that the business is secured. Hence, in case of any abnormality, the compensation will be their helping hand.
4. Employee protection: Employees are the backbone of any company. It is crucial that the business owner protects their interest in any circumstances. When a business is insured, employees will have a feeling of safety which has a positive impact on productivity.
5. A contract may demand it: There may be contracts that would have eligibility criteria. Having a secured business could make you eligible for all possible contracts.
6. Risk Cover: Insurance has a single aim to cover your business form risk. The future ahead is uncertain, why not protect it with the available resources.
Insurance can be a savior of a business when in real need. It has various benefits which can be availed by simply entering into an insurance contract.
Below are explained some benefits of insurance.
- Insurance has tax benefits that can be availed while paying the tax.
- It acts as a savior when a business meets any uncertainty. The insurer pays for all losses as described and agreed in the contract.
- Insurance manages cash-flow uncertainty. This means that the expenses occurred on the loss are reduced significantly as the insurer pays it for the business.
- When a company is covered with insurance, it meets the mandatory legal obligations. It lays a positive impact on the financial resources of the company.
- Insurance helps to protect the social interest. In case, when society is affected by business uncertainty, it helps to recover the burden.
- It helps in increasing investments in the economy. Insurance premiums are utilized in making further investments by the insurance companies.
- Insurance reduces the uncertainty of a lender by agreeing to terms that the payment will be made through an insured event.
Understanding various aspects of insurance is critical while planning to get secured. It is important to carry out individual research while opting for insurance. Rest, an insurance agent can help you with the formalities and various schemes.
It is advised to ensure safety measures by collecting detailed information before entering into an insurance contract.