A Quick Introduction About Insurance: What Is Insurance and Why Is It Beneficial?

The word insurance is a common term we often hear. It plays a great role, especially for business owners. It can help their business if there is any loss that is caused by natural calamities, accidents, or burglary. It is also considered to be the primary source for risk management sought by businesses. Many have considered that insurances are the savior of their business.

How does insurance work?

Essentially, there are two parties that enter into a contract – the service provider known as the insurer, insurance company, or insurance carrier and the person or company availing the insurance, who is known as the policyholder or the insured.
As for the monetary part, both sides of the party will agree on a sum, which will depend on the value of the assets. The given amount will be the highest that the insurer will give in case there is any loss. On the other hand, the insurer is charged a certain amount that he needs to pay at regular intervals – this is often referred to as the premium.
If ever the company suffers any loss, the insured will submit a claim to the insurer. If this happens, the insurer will check if the loss meets the protected areas of the contract. If the claim that was submitted meets the contract, the insurer will then pay as agreed.

Below are the reasons why insurance is important:

Mandatory according to the Law:

As per the law, any business that has employees needs to be secured with insurance. This includes workers compensation, disability and compensation, and many more. Any business that has failed to abide by the given law can be fine by the government. If ever that happens, it will cost more than the insurance.

Legal litigations:

There might be a situation where the business is being sued. It will just take one anomaly and your business can be done. It is better that your business is protected rather than risking legal litigations.

Increases credibility:

A business that has been covered by insurance increases its credibility which will benefit both the business and customers. You will earn a great impression from your client and customers if your business is secured. It’s because when something goes wrong, they won’t worry about the compensation if you are insured.

Employee protection:

Of course, employees play a major role in the company. They are even considered to be the backbone of the business. Business owners must protect their interest in any circumstances. When a business is insured, employees will have the feeling of being secured and this will also have a positive impact on their productivity.

A contract may demand it:

Some contracts may require that your business is ensured. So for you to meet their eligibility criteria, don’t skimp on this. Having your business secured can make you eligible for a lot of possible contracts – and thus, more opportunities. Hence, having insurance can widen your market.

Risk Cover:

Insurance is most popular for this purpose – to cover your business from risk. The future of your business is uncertain. So why not protect it with the available resources?
Some business owners suggest that having insurance can be your savior when or if the time comes that you will need help. It has multiple benefits that owners can simply avail by entering into an insurance contract. Thus, if you want to start your own business, may it be big or small, don’t forget to avail insurance.

Based on Materials from HY Insurance Blog
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