Other than the fact that most states require a business to be insured, there are numerous reasons why a business should purchase business insurance.
First and foremost, no person or business is protected from being sued. And once a money judgment is rendered against the person or business, the judgment must be collected. Judgment liens are to be taken seriously and they can be renewed. In addition, wages can be garnished, and equipment may be seized or sold. In some circumstances, bank accounts and assets can be seized in order to pay the judgment. The fact is, every person and business is collectible at the hands of a persistent attorney.
Secondly, know that the corporate format of a business does nothing but protect individual investors, owners, and offers from personal liability for the actions and debts of the corporation for corporate purposes. At any time, under certain circumstances and the laws of all states, these corporate protections can be removed. If this occurs, the owner may be liable personally and must answer a judgment with personal assets, such as a house, car, or even life savings. Therefore, it is very important to secure business insurance for any type of business – big or small.
Business insurance is also needed should one of the most undesirable circumstances occur – the death or disability of a principal member. Should something like this occur, it may be difficult for the business to survive. This is due to the fact that most businesses do not have the cash flow necessary to pay the estate of a deceased member for its interest in the business, and the business may be dissolved. Additionally, the death or disability may result in the remaining family members and business partners unable to work things out for the business.
There are several more reasons why it is a wise decision to purchase business insurance and value it as an investment in your business.