Defining a small business can be tricky. There are different metrics depending on which sector your business is a part of. Most definitions determine whether or not your company is a small business by taking a look at the number of employees you have or the amount of annual revenue it produces. According to the City of Dallas Economic Development, of the 65,000+ businesses that are headquartered in Dallas, Texas, 59,000 of them are small businesses. In the general North Texas region, this number balloons higher considering the many other businesses in economic hubs such as Fort Worth, Richardson, Arlington, and Irving, to name a few.
Protecting your business and your employees is critical for your small business’ success. The everyday obstacles your company must face are complex enough. Handling an unexpected expense can have immediate and long-term effects on the health of your business. Is business insurance mandatory by law? No, but it is more than worth it to limit the cost of particular losses and keep your business afloat during turbulent times to move forward. Explore seven great reasons you should protect your business with the right business insurance coverages.
1. The Rising Cost of Medical and Legal Expenses
One of the great coverages available to businesses is Workers’ Compensation. This policy will protect your workers from a loss of income while they heal from work-related injuries and your business from lawsuits surrounding such injuries. Leaving your small business up to liability for such incidents can be devastating in several ways:
- Lawsuits are time-consuming and expensive. The cost of hiring a lawyer to defend your small business alone can reach several thousands of dollars.
- Medical expenses also continue to grow and can be difficult to overcome for many businesses.
- Recruiting and retaining talent can be difficult without workers feeling protected. Many qualified candidates may pass on working for your business if they do not feel secure in receiving income should they have to miss time due to a work-related injury.
According to data collected from the National Council on Compensation Insurance’s (NCCI) Workers Compensation Statistical Plan database, the average workers’ comp claim is $42,008. For any business, unexpected expenses reaching tens of thousands of dollars is a problem, but for small businesses, it can mean severe consequences including bankruptcy or closure. Workers’ Compensation coverage can help protect your business from these costly situations and provide workers and owners with peace of mind.
2. Construction Materials and Labor Costs are Also Rising
Having to restore or rebuild the physical elements of your business after a loss is costly and only gets more expensive as time moves on. There is natural inflation, periodic spikes in construction costs, and even supply chain issues that can all affect the amount you’ll pay when hiring craftsmen.
Depending on your industry, some risks can be more prevalent than others; however, there are still common issues that can lead to property damage including:
- Accidents leading to damaged assets
- Liability from injuries sustained by customers
- Loss of income from the inability to conduct business after a loss
- Theft and vandalism
Diminishing the cost of physical damage to your business helps keep operations on track, protects your bottom line, and restores critical aspects of your business quicker than taking on debt or paying out of pocket. With Property Insurance for your business, you’ll receive the protection you deserve against physical losses that may occur throughout your business’s operations.
3. The Risks of Running a Business Since COVID-19
Even as the world learns to adapt after the outbreak of COVID-19, there are still lingering effects seen throughout a variety of industries. Arguably the most notable would be the logistical and economic hurdles within the supply chain. Some companies choose to close or limit operations due to outbreaks within their place of business.
These disruptions can cost companies by interrupting revenue and business operations. Business Interruption Insurance protects your profits when there are interruptions. Your bills won’t stop even as operations do. By protecting yourself against interruptions, even if they are out of your control, you can help your business and save money in the aftermath of a covered loss. Some of the areas Business Interruption Insurance can help you in are:
- A loss of net income
- Advertising and marketing expenses
- Business expenses
- Costs associated with relocating
- Mortgage payments
- Paying your employees’ wages
Interruptions mean a loss, and lessening those losses means a stronger future for your business.
3.5 Considerations for Remote and Gig Economy Workers
COVID-19 has changed the way we work. Many jobs were already remote but since quarantine and beyond, more workers are finding themselves working remotely or in a hybrid setting. Furthermore, it is easier now more than ever before to work side jobs or run entire businesses from the comfort of your home. A home insurance policy is unlikely to protect work-related property in the same way it protects your personal possessions. Business property coverage can help you restore such items in the event you suffer a covered loss.
4. Protect Your Business as Technology Continues to Expand
Technology continues to connect all of us in new and interesting ways. There are more devices and ways to connect than ever before. Things get even more complex when you consider Web3 and the Metaverse slowly but surely introducing themselves into our lives. Cybersecurity is critical for any business to succeed, but when these measures fail, it is important to act quickly to limit the damage. There are several obstacles modern businesses are facing online for their cybersecurity. These threats include the following:
- Corporate espionage to steal preparatory information.
- Cyberattacks that are built to destroy or stall operations.
- Killware that is capable of causing actual harm or death to humans.
- Malware capable of stealing information.
- Ransomware which extorts businesses.
Companies facing these threats will generally deal with these potential issues:
- A loss in propriety information and revenue due to a data breach.
- A loss in revenue or profits due to paying for access to sensitive files.
- Fines from the government.
- Liability from harm caused to the general public.
- Liability regarding sensitive information of your employees and/or customers.
- Loss of income due to the inability to access your network.
- Miscellaneous expenses including transaction fees, notification fees, and gas fees.
Breaking down your coverage options, the two categories most businesses find themselves needing are policies built on liability and policies protecting against data breaches. Liability insurance and umbrella insurance coverage are great options but they may not be enough for attacks online. Here at Freedom Insurance Group, we know how integrated technology is in your business and the responsibility businesses hold to protect their digital assets and critical information. Our agents can help you protect against advanced cyberattacks so that you won’t face liability or data loss alone.
5. Unpredictable Weather Cycles Affect Your Business
Texas is a beautiful state with plenty to offer, but over the last several years, we have seen some of the harshest weather events come to life. We may be used to extreme heat, hail, tornadoes, and severe thunderstorms in the Dallas-Fort Worth area, but unusual weather patterns continue to challenge businesses, customers, and governments. In 2021, the Lone Star State found itself at the mercy of a statewide winter storm creating the “largest claim event in Texas history”.
Extreme weather conditions can put customers and employees at risk if businesses stay open. When your business closes, again, you’ll find yourself losing revenue while bills continue to come. Coverages such as flood insurance, business interruption coverage, and business property insurance coverage can help you overcome the harmful hurdles unwelcomed weather can provide.
6. Globalization Can Expose Your Business to Unique Perils
The Internet continues to shrink the world and connect businesses. It has made globalization possible on a scale never seen before. But conducting business outside of the United States can create unique issues for your company to contend with. There are different coverages that will help you prepare in the event of losses during travel, an inability to conduct business, injury liability, and more. Your insurance agent can help you navigate the coverages you and your employees need for a calm mind.
7. Texas Has Some of the Highest Auto Insurance Rates in the U.S.
Determining a sole factor as to why Texas is home to some of the highest auto insurance rates in the country is impossible. Insurance companies all use their own calculations and methods to determine the amount of risk they take on when enrolling a driver. These calculations look at a variety of factors that all affect the rates drivers pay. The higher the risk you are as a client, the more you will pay and vice versa. However, some of the reasons Texan drivers pay more are basic and can affect the amount your business pays for commercial auto insurance:
- Location is key and Texan drivers face a variety of harsh weather conditions because of its geographical conditions.
- Ranked second in the nation, Texas has one of the largest GDPs going by states in the country. Where there is business, there is increased use of vehicles for travel and additional business operations.
- Texas is the second-largest state by both land and population. There are more roads and vehicles which equates to more risk from the eyes of insurance brands.
Just as property, medical, and legal costs continue to rise, so too does the cost to repair or restore vehicles. By law, you’ll have to purchase commercial auto insurance to legally drive in the state of Texas. The right coverage will protect you and your business from liability issues and property damage through a variety of covered losses. Finding the right coverage for your business is key to staying protected to avoid gaps in coverage and saving money in the process.
Freedom Insurance Group Helps Small Business Across Dallas
Helping small businesses stay protected is what we do every day at Freedom Insurance Group. Our passion is helping you prepare for the worst while hoping for the best. We work with over 25 top-rated insurance brands to help business owners in Dallas and all throughout Texas find the right coverages built to protect their individual needs.
There are a variety of industries and we understand that the insurance needs of a factory will be different than those of a restaurant, and so forth. Our agents tailor your coverage needs to fit your operations. We do all the heavy work on the insurance side so that you can focus on keeping your business operations going. Ask one of our agents about how we save our clients 40% on average or request a free business insurance quote today!