The question “is business insurance compulsory?” is a valid one. If you have employees, you have the legal responsibilities of paying out benefits to them. For that reason, many companies now require all members of their employee pool to take out liability insurance policies. These policies cover the business owner for any claims made against them due to negligence or even intentional wrongdoing.
Some business insurances products that may be considered by tradespeople include: Personal accident cover: If you have employees, then this is a product that would be considered compulsory. This will cover compensation costs and legal fees if you are sued by a customer, a member of the general public, or your supplier for accidental damage or injury as the result of your company activity. It's not the only type of policy available, so don't assume that there is no cover for personal accidents – it's just another option. If you are looking for trade insurance, then you should check out our comprehensive policies.
Public liability insurance is another option that a business owner may want to consider. Public liability insurance covers claims made against the business owner for accidental damage or injury to a third party as the result of the actions or inaction of the business owner. With public liability insurance, the business owner is covered for the actions of both customers and suppliers, making it easier for the business owner to protect themselves from claims being made against them. However, some states do not recognise public liability insurance as a compulsory coverage, meaning that the business owner is free to choose whether or not they take out such protection.
One reason why some businesses may consider whether or not they need to get business insurance is because of their reliance on contracts with suppliers. Contracts in force can often be difficult to challenge in the event of an insurance claim. Some suppliers can be notoriously obstinate, unwilling to pay when their contract is challenged, and in some cases they have been known to refuse to pay when there has been a claim. Other suppliers, however, will allow claims to be made under the appropriate contract provisions, although their policy may include some or all of these additional protections. The business owners' responsibility here is to ensure they know the terms and conditions of their suppliers' contracts and how they can make a claim under those provisions.
Some people are concerned that if they are not protected by a public liability insurance or unemployment insurance fund that they might have to declare bankruptcy. In fact, declaring bankruptcy is one of the worst things that any business owner could do. Bankruptcy can impact on credit ratings for years to come and will prevent banks or other lenders from providing further credit to the business or individual. Even worse, declaring bankruptcy will prevent any potential entrepreneur from ever starting up their own business again. To illustrate the point, imagine that you are owed money by your small pizza business and you fail to pay it. Under the laws of certain states, your small pizza business will be deemed insolvent, and all assets will be liquidated to pay off your debts.
As the above illustrates, it is vitally important for businesses to protect themselves by purchasing public liability insurance and/or business insurance products. The above discussion only touches on a few of the main issues that are involved. Any business owner should consult with an attorney experienced in handling such insurance matters before making a decision. This author is not a lawyer and is solely responsible for any actions taken in connection with articles written or distributed using this article.
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