In the 21st century, American business owners are operating in the most competitive and dynamic global market in history. In 2017, the World Bank estimated the size of the gross world product to be around $74 trillion, and many economists believe this is a very conservative estimate. The entire world is a lucrative market, and California is its eighth-largest economy. Nonetheless, operating a business these days entails certain risks that cannot be ignored.
Commercial insurance is an aspect of business that company owners and self-employed professionals in California see as one of many compliance requirements—a nuisance, in many cases. The reality of this aspect goes beyond compliance, and here are six reasons about commercial insurance San Diego business owners should be looking at this business factor in a different light.
1. The Litigious Society Knows No Boundaries
An accident, an unhappy employee, a defective product, a competitive mishap: these are examples of situations that could wipe out a company that isn’t protected by commercial insurance. While a lawsuit could be resolved in favor of a respondent business owner, the legal costs incurred and the loss of income could easily seal the fate of an uninsured company.
2. Contracts May Depend on Commercial Insurance
Similar to a mortgage lender that makes homeowners insurance a requirement prior to closing, a client or partner who wishes to do business with a company may also require a certain amount of commercial insurance coverage before coming to an agreement. Freelancers who complain about the difficulties they face getting lucrative contracts seldom think about the importance of getting commercial insurance policies.
3. Business Landlords May Require It
When you start looking for office space, your future landlord will more than likely ask for proof of business insurance. You may catch a break if you rent a shared workspace, but never if you intend to rent space to set up a retail or industrial shop.
4. In Many Cases, It’s a Legal Requirement
Professional regulators and municipal offices across California often require commercial insurance before they issue a license or operating permit. This requirement is part of rules adopted from statutory directives. Very few business owners in the Golden State are able to legally operate without a commercial insurance certificate.
5. Inherent Risks Cannot Always Be Avoided
Slip-and-fall accidents are typically mentioned whenever commercial insurance is discussed, but there are many other adverse situations that business owners cannot even envision happening. A coffee maker accidentally left on overnight can burn an establishment down, you may crash your company vehicle into a FedEx truck, a disgruntled employee may sue you after being fired, or one of your managers may experience cardiac arrest in the office due to excessive workload.
6. Insurance May Keep a Business in Operation
Not all business losses have to be catastrophic. In some cases, temporary losses can be offset by certain provisions of business insurance. For instance, a shop owner may be able to make payroll after a fire and avoid permanent business closure if his or her policy has adequate coverage.
Owning a business means assuming certain kinds of risk, but operating without commercial insurance shouldn’t be among them. The reasons listed above are just a few of the factors that make commercial insurance an absolute necessity for every business. For reliable, affordable commercial insurance as well as homeowners, renters, motorcycle, and auto insurance, San Diego residents can reach out to the experienced professionals from Altra Insurance Services. Call us today at (800) 719-9972 to find out how we can meet all your insurance needs.