Why Insurance Is A Necessary Business Expense

By Staff Reporter

May 24, 2019 09:47 PM EDT

Making it as a business owner is no easy feat, with modern companies being constantly forced to cut costs and make disruptive changes to their plans in order to remain profitable in the face of fierce competition. Unfortunately, one of the earliest casualties in any business' efforts to cut its operational costs is insurance, which many entrepreneurs deride as being largely unnecessary for the wellbeing of their business.

In reality, every company needs a robust insurance regime in order to remain operating in the event of a disaster, be it man-made or otherwise. Here's why insurance is a necessary business expense, and what entrepreneurs who are skeptical of its perks need to understand.

Too many businesses lack insurance

Despite the fact that certain insurance coverage is sometimes legally required in order to operate as a business, a wide plethora of modern companies still lack sufficient insurance to keep themselves up and running in the event of an unexpected crisis. Whether it's rising flood waters, raging wildfires, or simply employees getting sick or an unexpected gas leak, there's a myriad of ways in which modern businesses can suddenly and irreversibly find themselves in permanent financial ruin thanks to a lack of insurance foresight.

This is no exaggeration, either, as it was recently estimated that as many as 1 in 3 small businesses faced a top hazard last year. With the bulk of American companies being drastically underinsured, and with small businesses in particular often lacking thorough insurance coverage entirely, it stands to reason that we're facing a commercial crisis in this country that's largely going ignored. Rather than becoming another faceless entrepreneur who lost their commercial empire because of a lack of insurance coverage, modern business owners should be taking strenuous steps to educate themselves on the vital important of keeping yourself covered for any eventuality.

Insurance is often the one thing that stands between a business and oblivion should the unexpected happen. With the cut-throat nature of the modern marketplace forcing business owners to always keep an eye on competitors, few of these entrepreneurs also have enough time and foresight to keep an eye on other eventualities which could cause their business prospects to crater. Besides acting as an important safety net, however, entrepreneurs also need to understand that insurance can demonstrably bolster workplace morale while ensuring your workers that the company cares for them.

Insured employees are happy employees

For decades, business owners thought that all they needed to do to guarantee a happy workforce was give their workers adequate wages, making the mistake of believing that insurance wasn't important. With coverage and certain elements of life like healthcare being more expensive than ever before, however, high salaries aren't enough - employees everywhere are demanding insurance benefits in places like Alberta, that can keep them happy and healthy through their most productive working years. Indeed, the best auto insurance brokers in Alberta also offer commercial insurance which benefits managers as well as employees.

Market research has demonstrated that employees who report being very happy with the health plan offered to them by their businesses are more likely to stay with the company than they are to defect to a nearby competitor. If brain drain is something that's been holding your company back, consider bolstering the benefits package that you offer workers in an effort to keep them within the fold. Even if brain drain isn't an issue for your company, more robust insurance coverage will doubtlessly lead to increased workplace morale and a healthier workforce less likely to succumb to illness or injury.

Lacking other forms of insurance coverage can come back to haunt you in legal disputes. Over a quarter of all small businesses lack worker's comp coverage, for instance, something that can spell legal disaster for these businesses in the event of a workplace injury which could lead to a lengthy and expensive court battle and terrible PR. Until entrepreneurs wise up and realize that insurance is a necessary business expense that they need to ensure their futures, more small businesses will keep failing for reasons that were otherwise avoidable.

Insurance is a long-term saver

By far the biggest reason that some entrepreneurs view insurance as an unnecessary business expense is that they think it's a money-sink. In reality, though, insurance is a long-term saver that could rescue your business from financial jeopardy in the event of an unexpected disaster or sudden downturn in the market. If your business has insurance which allows it to stay afloat when commerce must temporarily stop for any number of reasons, that coverage could be the small thing which saves your commercial empire.

Don't make the foolish mistake of thinking that you can cut the costs of running a business by avoiding insurance. For a wide variety of reasons, including that it bolsters employee wellbeing and morale while acting as a great safety net, insurance is a necessary business expense in any industry.

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