Running a business big or small is no easy task. That said, for many people, doing so is both a dream come true and a way to secure financial security. Starting or managing a small business comes with many risks. However, some of these risks can be mitigated with policies offered by an insurance agency. Unfortunately, according to Forbes, nearly 30% of small businesses don’t have small business insurance, putting entrepreneurs and investors at risk. Let’s take a look at why insurance policies are necessary.

1. Insurance May Be Legally Required

Legal authorities may stipulate that certain types of insurance are necessary for your business. For example, if your business operates vehicles, you may be required to take out specific insurance plans. You may also need to take out insurance from an insurance agency to cover employees, customers, and guests who are injured at work, on your property, or while using your products or services.

2. Lenders May Require Insurance

Besides being legally required to take out insurance, some lenders may stipulate insurance requirements in order to secure a loan. Often, loans are tied to collateral. If you buy a commercial building with a loan, the lender may require that the building be insured, for example. Should you fall behind on the loan, the building might be possessed. If the building is damaged and uninsured, however, it may lose value. This increases risks for lenders as they may recoup less money should they have to take control of the property.

3. Disaster Can Strike Any Time

Another reason to get insurance is to protect yourself and your business from various disasters. For example, what if your building is hit by a harsh storm? The right insurance policies could provide protection. Otherwise, you might have to foot the entire bill to get your business up and running again. For many entrepreneurs, this could spell financial doom.

4. Risks Must Be Mitigated

At the end of the day, insurance protects companies and entrepreneurs from various risks. What exactly a plan addresses can vary, so what risks your business might continue to face could also vary. It’s a smart idea to step back and consider the biggest risks. From there, you can strive to mitigate them.

Insurance can be extremely complicated. There are so many different types of insurance offered by an insurance agency relevant to businesses and it can be difficult to understand the fine print. If you need help, get in touch with Branco Gardner Insurance Agency, Inc today. With over 50 years of experience, we'll be able to help you through the process!