Business insurance is one of the most important and supportive services such as Transportation for business. If you have insurance coverage that can be very supportive of your business as well as your personal life.
In the previous article, we discuss the Benefits and 14 reasons why your business needs insurance.
From that article, we discuss a little bit about what is insurance. But with that article, you will learn to widen the idea about what is insurance? it’s history?
Why Business Need Insurance?
All businessmen would like to starting and running their business successfully and profitability without any effects or losses.
But today business environment is becoming more complex and uncertain. So business needs to work with that uncertain about their business future. Also, anyone cannot predict the business’s future.
So many unexpected restrictive things can be effective to your business such as fire, natural disasters, storms, damages for business property and products, theft, terrorism, injured for someone in the business, a file suit by a client and many more ruin things.
So all of the businesses have to do their business with that uncertainty. That uncertainty generates a risk about the business’s future. So you have to do your business with a huge risk about your business future.
Remember that, “Starting and Running a successful business always comes with inherent risk.” So you need to look at potential risks to determine if the benefits outweigh the disadvantages.
Because of the above reason business need some risk covering to manage the risks and protect the business, its assets, employees and the whole society.
One of the best ways to do that is to make sure business and its stakeholders are adequately insured. For that, you can get the help of insurance. Insurance is one of the best risk management tool. It transfers the business risk of loss to an insurance company.
That is the importance of Business Insurance for business.
Insurance can protect both stakeholders and businesses properly. In some businesses, there are laws and regulations that require to get insurance. However, by insurance a business, it can experience the best benefit of all while minimizing its risks.
What Is Business Insurance? Business Insurance Definition.
Insurance is a “Thing that helps protects the business from financial loss when things go wrong”.
It is a service that assumes the risks. “Insurance coverage protects of business from losses due to the event that may occur during the normal course of business”.
If your business has any loss for its resources and money, if your insurance policy covers that cause of loss, then insurance will pay for businesses for its damage or loss. So you will prevent loss.
Insurance is a protection against loss for which you pay a certain sum periodically in exchange for a guarantee that you’ll compensate conditions for any specified loss by the reason that cover from the insurance policy.
History of insurance?
In early society, in the 2nd & 3rd millennia BC, merchants use river and sea to transport their goods and going business across the world by boats and vessels.
When they doing their transport via waterways, those boats and vessels and its carrying cargo were often lost or damaged or stolen by thieves and pirates. Because of that, those merchants have lost their money as well as their vessels.
Then shippers and merchants realize that they want to reduce that risk of losses to pool the risk among all of them. As early as 3000 BC, Chinese merchants pooled their risk of loss when moving cargo down the rapid Chinese sea and waterways.
In 3000 BC, merchants, shippers, and traders in Sumer and Babylonia pooled their risk to prevent major losses of cargo from loss or damaged or stolen by thieves and pirates. That causes to build up the insurance.
What are the Features of Insurance?
Insurance is a contract between the insurer company and an insured person or entity.
An insured person or entity receives financial protection or reimbursement against losses from an insurer.
The contract –for insurance there should be a valid contract between the insured and insurer. With that, the insurers must undertake to pay the insured upon the happening of the particular event.
The insurer – Any company which is incorporated under any law and is authorized to carry on insurance business.
The insured – Any person who has the capacity to contract may be insured under a contract of insurance.
An insurance product (Policy) that an (insured) person or business buy, typically through monthly payments, that provides financial protection against risks.
Those monthly payments called, premiums. Premium is the amount that you have to pay in each month or year to have the insurance.
That all premiums go to the pool of funds. Insurance involves pooling funds from many insured entities to pay for the losses that some may incur. Then pooling build up with a Large number of persons and entities premiums.
If someone has damage or loss because of some effect that covers from their insurance policy, the insurer will pay that loss by using the fund in that pool.
So by Insurance, you can spread the risks over a number of people rather than being concentrated on a single individual. So insurance is a method or process which distributes the burden of the loss on a number of persons within the group formed for this particular purpose.
Methods of insurance
There are variant methods of insurance as follows.
1. Co-insurance – risk share between insurers
2. Dual insurance – having two or more policies with overlapping coverage of a risk
3. Self- insurance – with that method risk not transferred to the insurance company, entity or persons can solely retain that fund by themselves
4. Reinsurance – insurer passes some part or all risks to another insurer.
Type of insurance
2.Vehicle (commercial auto, bike insurance ) insurance
3.Business interruption insurance
4.Product liability insurance
5.Workers’ compensation insurances
7.Business income insurance
8.Commercial flood insurance
9.Key person loss
10. Life and health
11.Business opportunity plans
Additionally, you can get coverage for Terrorism, Pollution Liability and Environment, Data breach, directors and officers, employment practices liability and more.
Things to think before getting Business Insurance
Before getting a Business Insurance first, you need to choose what you want to be protected against.
Then the insurer will calculate the risk that the events to be insured will happen and the insurance company will determine the premium that you will need to pay.
If something happens and damage or loss for your property and the cause of damage or loss is cover by your insurance policy, you can claim your insurance. For that, you must tell your insurer what is happen?
Then, they will check that if it is cover under your insurance policy and if the claim meets with what you are protected against, then your insurer will pay the loss for you as agreed before.
Before insurance first, you need to choose what you want to be protected against. Then the insurer will calculate the risk that the events to be insured will happen and the insurance company will determine the premium that you will need to pay.
If something happens and damage or loss for your property and the cause of damage or loss is cover by your insurance policy, you can claim your insurance.
For that, you must tell your insurer what is happen? Then, they will check that if it is cover under your insurance policy and if the claim meets with what you are protected against, then your insurer will pay the loss for you as agreed before
What is the Importance of getting the right Insurance coverage?
Most business owners have a better idea of what is their business, operations, employees, materials, technology, and equipment. But they haven’t a better idea about what type of insurance coverage they need to continue and protect their business.
So if you want to start a business you must probably know about what of the common perils you have to face? What can happen accidentally and other risks related to operations and in business? After that, you should choose the proper insurance coverage to cover your risks.
By having the right insurance coverage, you and your business can avoid major financial loss and minimize your risks. So be careful choosing the right insurance types that most suited to your business operations and its risk and put those insurance plans in place as soon as possible.
It will helpful for you to cover the costs of liability claims and property damage.
If you haven’t a proper Business insurance coverage you may have to pay those costs with your own business and personal assets. So it’s better to get suitable insurance coverage for your business.
business insurance cost or business insurance estimate depends on, your insurer, insurance policies, and types of risks.
Also, read our previous article to know what is the importance of transportation and What is the importance of effective communication for Business organizations.
I hope the above Business Insurance details help you to make an idea about What Is Business Insurance? Business Insurance Definition, History and Needs Of Insurance, Needs Of Insurance for business. And if you have any problem or know more about Business Insurance? Business Insurance Definition, History, and Needs Of Insurance, please share with us in the comments section below.