Insurance coverage protects businesses from unforeseen events. When operating a business, a series of liabilities could emerge at any time and generate a serious financial loss. Without insurance coverage, the business could incur such losses that the company may never recover. If you are planning to run your company without insurance, this list will show what could go wrong and destroy your company.
Product Liabilities and Consumer Injury Lawsuits
Product liability coverage offers funds to reduce the impact of a legal claim against the company for a faulty product. Consumer injuries give consumers the chance to collect compensation for their personal losses. Manufacturers need the insurance policies or they could face excessively high financial losses if a consumer becomes injured. Lawsuits for product liabilities can become devastating for any business.
When a consumer injury is reported to the Consumer Rights Protection Agency, the federal agency can issue a product recall and have the product removed from stores. Once this happens, the company’s financial losses start. A product liability claim could cause the company to lose credibility and their reputation, making consumers distrust the business and its products. Companies that fail to get proper product liability coverage face all these financial losses without assistance, and this could be the end of the company. Business owners can review available policies by visiting garrity-insurance.com now.
A Breach of Contract Claim
A breach of contract claim is based on a failure to complete all contractual obligations. This could also include claims for property damage that happened when services were rendered. If the company refuses the complete the omitted services, the customer can file a legal claim to collect the money they paid the service provider. Companies purchase general liability coverage to collect funds to cover legal claims and losses related to a breach of contract lawsuit.
Cyber Liabilities and Identity Theft
Any business that operates online faces the risk of cyber attacks and hacking. The database for an e-commerce website must be compliant with IT standards to protect consumer data and prevent access to confidential information. If a cyber attacker gains access to the data, the customers could become a victim of identity theft. Any financial losses generate because of identify theft could face the company, and the customer could file a lawsuit to collect damages. Cyber liability coverage is necessary to protect the company when an attack happens. Without coverage, the company will pay out of pocket.
Worker-Related Injury and Violating Federal Laws
Worker’s compensation is required by federal law for any company that has hired more than one worker. The law states that the workers can be related to the employer and still must be covered by worker’s compensation insurance. Any company that doesn’t have adequate coverage for their workers could face fines for the violation of federal laws. Federal agencies can shut down the business entirely due to a lack of coverage for the workers.
If a worker is injured on the job, the employer is required to complete a worker’s compensation claim for the worker. The human resources manager must send the injured worker to a medical facility for an assessment. Under the policy, all medical costs for the injury are covered unless the worker played a role in causing their injuries. This is why all injured workers are screened for alcohol and controlled substances during their medical assessment.
If the worker is unable to return to work, the policy pays replacement wages for the worker until the worker is able to return to work. The replacement wages range up to 90% of the worker’s normal wages. If the worker is denied coverage and was eligible, the worker can file a lawsuit against the company. Without insurance, the employer would pay all these expenses out of pocket if the worker won their legal claim.
An Inability to Pay Your Expenses or Workers
Events such as the recent global pandemic can bankrupt companies that don’t have a safety net. When states chose to shut down non-essential businesses, the businesses faced serious economic struggles, and some companies have yet to recover from the loss of profits. However, insurance policies such as business interruption coverage give businesses enough funds to pay for daily expenses such as operational costs and salaries for their workers. It prevents companies from suffering major losses in the absence of incoming profits.
A Complete Loss of the Property
Commercial property coverage offers funds for structural repairs and property replacement costs after the property insurance has been destroyed. The terms of the policy explain the covered events such as fires, natural disasters, water leaks, and criminal vandalism. The policy might have a clause for either the market value or the true replacement value if the property is a total loss. However, if the owner doesn’t have property insurance, they suffer the impact of the full loss if the property is destroyed.
Premises Liability Claims
General liability and property coverage provide assistance with liabilities that the company could face with their property. Property owners face liabilities if a visitor becomes injured on or inside their property. Commercial property owners could lose a premises lawsuit if the victim can prove that the owner was aware of the hazard that caused the injuries. Without insurance, the business owner faces hefty monetary awards if the victim wins their lawsuit. However, if they have insurance coverage, the business owner can file a claim to pay for all the victim’s medical costs and replace their lost wages.
Insurance policies cover a multitude of perils that a business owner could face when operating a company. The policies include coverage for injured workers, product liabilities, premises liabilities, and coverage for the property itself. Liability coverage such as general or global coverage protects against major financial losses because of lawsuit damages. Companies that operate without proper coverage incur high losses and hefty fines if they are in violation of federal laws. Discussing possible risks with an insurance provider could help the business gain better protection against the unexpected.