Houston Business Insurance: Top 5 Reasons To Insure Your Houston, TX Business

Houston Business Insurance: Top 5 Reasons To Insure Your Houston, TX Business

By In Uncategorized On April 22, 2020

Business insurance is a priority for all businesses operating in Houston, TX. If you’re a business owner, insuring your business equipment, property and vehicles is essential. The business has to be insured to prevent financial losses in the event of a lawsuit. There are ways to purchase insurance for your small business without overpaying. Insurance secures the longevity of your business while enabling growth.

Texas is a business-friendly state and while frivolous lawsuits are minimized, you can be held liable for every accident on your premises, even if you register as a “Limited Liability Company” (LLC). Businesses are prone to accidents and this may lead to injury/loss of life, damages to property or reputation. 

The legal expenses, damages, and court filing fees can amount to tens of thousands of dollars while the settlement amounts can exceed 7-figure sums. Even if you’re a successful business the settlement fees could make you go bankrupt. This is why it’s essential to add a liability insurance policy to your business insurance policy.

Top 5 Reasons To Insure Your Business

Entrepreneurs have a high responsibility to their clients, employees and the public at large. To ensure your livelihood and the welfare of your employees, you must purchase business insurance coverage. While it’s not legally mandatory to insure your business, this is a reasonable choice. It’s possible to get business insurance Houston for a low price and the following are the top 5 reasons why:

1) Legal Liability

The main reason to take out business insurance is to be prepared for legal liability. If you’re covered for all possible injuries and damages, you have little to worry about. If you’re not covered, you could face bankruptcy and life-long debt. This is why it’s essential to have liability insurance in addition to regular business insurance. 

Here’s the key takeaway: If you ever cause injury, damages or you’re found guilty in court for things you or your employees did – the liability insurance has you covered. Liability is ONLY for 3rd party persons such as your clients, partners or other people involved with your business. It is not about damages caused to you. This is why you’ll need to add liability to your business policy as a separate policy.

It’s wrong to assume you’re protected because you run a small business and you don’t have a history of accidents with previous clients. Let’s say it’s raining outside and a customer walks in and slips on your floor. If they twist an ankle or injure themselves, they could sue you for serious amounts of money. 

While such accidents are not the fault of the business owner, more than 20% of all lawsuits are for similar slip and fall accidents. You couldn’t have predicted something like this could happen and the court would still hold you liable. This is why you need liability insurance as a defense mechanism.

Houston business insurance plans will cover you for situations of those kinds via liability coverage. The following are the main protections benefits for business owners:

  • Medical Expenses. The cost of bodily injury could be low if the client is moderately injured and they need less medical care. If the person is seriously injured and presses charges, you will be covered for their medical expenses.
  • Property Damage. This extends to all property damage you or your employees cause to another business such as a business partner, distributor or client in business. Let’s say your employee damages equipment by accident – you will be covered for the repair cost of the equipment.
  • Product Coverage. If your company manufactures a product that caused harm to a person and they decide to press charges, this policy will cover you for the legal defense charges. This type of liability can be expanded to multi-million dollar sums if you’re a large manufacturing company.
  • Contract Liability. If you enter a legal contract with another company such as a distributor and you fail to deliver on the contract, they may press charges. If one of your suppliers runs out of material and you can’t supply them you’ll need to legally defend yourself for not upholding the contract.
  • Business-Specific Liability. Many small businesses require a specific form of liability based on the chances they cause unintended harm. For instance, liquid stores may require liquor liability in case a client passes from alcohol consumption. Security firms and other defense companies may need reasonable force liability in the event their employees injure a person. Companies specializing in transport/logistics need specialized insurance for their fleet of vehicles. These can be purchased individually and added to an existing coverage policy.

2) Expand Your Business

As a business owner, insurance may be required to fulfill contractual obligations and expand your business. Whether you want to invest in new products, expand your space, hire more employees or take out loans for production, they all require high insurance coverage. Here’s how business insurance can help you grow:

  • New Offices. Businesses that want to lease a larger office space can fulfill their rental obligations because the landlord may require high insurance coverage. If your current policy doesn’t cover it, you can always purchase additional business insurance.
  • Bank Loans. To take out a loan to finance new expansions such as new equipment, logistics or manufacturing, every bank will impose a minimum insurance requirement which you’ll have to meet for liability.
  • Bigger Clients. To attract big clients and expand your reach, a large insurance coverage can provide the guarantee you need that the contract will be fulfilled on time.

3) Protect Employees

In Texas, you must provide workers’ compensation by law, but the mere act of insuring your business means you’ll be protecting your employees. For example, if a competitor sues you and you lose a lawsuit, the insurance coverage will pay for the lawsuit and you’ll remain functional. This means people working under you now will get to keep their jobs as a result of your decision to get insured. 

While you could give your employees benefits such as disability coverage, you’ll be doing a lot more for them by keeping them employed. Your interests align with your employee’s interests. If you protect your own interests, you’ll be protecting your employees.

4) Protect Inventory

Do you have expensive equipment to maintain? If you manufacture products or offer healthcare services, chances are your equipment is worth hundreds of thousands of dollars. What happens if someone breaks in and steals the equipment? What if the equipment is damaged and you have to spend money to repair the equipment? 

  • Business insurance allows you to list your important inventory and have it protected no matter what happens. If you need repairs or replacements, business insurance has you covered.

Businesses that have large warehouses with a lot of inventory are prone to break-ins. This is why you should insure your business inventory for the full replacement value to replace it in the event it’s stolen. Even if a small portion of your inventory is missing, this can leave a dent in your bottom-line profits.

5) Acts Of God

Natural disasters such as floods, hurricanes, earthquakes and other events that damage your assets will be covered. What happens if your business facility is hit by a hurricane and you have to spend thousands of dollars replacing it? The cost of replacement will be covered under this policy. This policy protects you against all things you can’t predict, such as natural disasters and even pandemics.

If you don’t have extensive business insurance, you’ll have to pay for the repair cost out of pocket. In business insurance, you only have to pay a deductible. This is a small sum of money that you pay before the insurance company starts paying for you. Instead of having to take out a loan to cover your repairs, you can take out an insurance policy that covers you for all possible emergencies.

How Much Insurance Does Your Houston Business Need?

Companies need business insurance based on the industry and the risk factor. A small company may only need $500-1M in total coverage.  If you’re based out of Houston, TX, you can spend as little as $4000 a year insuring a 30-50 person company. 

If you’re a 1-2 person start-up working as contractors, you may be able to pay as little as $500 per person a year. Small business insurance Houston will provide coverage in the hundreds of thousands of dollars for small businesses and self-employed professionals.

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