Getting a good contract is beneficial for any business. However, many contracts require that you have particular types of small business insurance. This means you can miss out on business opportunities if you do not already have adequate insurance coverage. High-end clients usually require insurance because they want to guard their interests in case you fail to deliver on your contractual obligations.

Moreover, a client can sue you if they feel that you failed to live up to the contractual agreement in your service delivery. Even if the lawsuit is baseless and you are not in the wrong, there are costs involved in simply defending yourself from the accusations. Insurance helps to offset or even cover these unexpected expenses.

Here is a look at some situations where business insurance is needed or especially beneficial for small businesses.

Situations and Cases That May Require Small Businesses to Have Insurance

Typically, you will likely be required to have small business insurance when you must safeguard the interests of your clients. In those cases, your clients need extra assurance that you provide protection that's undergirded by adequate insurance coverage and not by less substantial resources. In addition, insurance requirements are common in some fields, such as construction. Here are a few more situations that could require small business insurance:

• Personal and property risk - You likely need insurance if there is property damage and personal injury risks that come with your service or goods. For instance, retailers may require distributors and manufacturers to have insurance coverage.

• Leased commercial space - Often, commercial properties require their tenants to have a set amount of liability coverage that protects against claims that take place on the leased property.

• Licensed technology - Business owners may require insurance covering technology failure that leads to harm or infringement claims.

• Borrowing money - If you borrow capital to fund your operations, equipment, or buildings, the loan agreement may contain certain insurance coverage requirements.

Other Reasons Why You Need Small Business Insurance

• Legal Requirement - The law requires you to have particular kinds of small business insurance, such as workers' compensation, based on where your business operations are based. Failure to have the legally required insurance coverage can result in you being excluded from public contracts. It can also carry the risk of criminal and civil penalties and fines, which could be much more costly than the cost of insurance coverage.

• Builds Credibility - Having insurance also shows potential clients that you are meticulous in risk management and that you follow solid business practices. Conversely, clients may see a lack of insurance as evidence that your business could be lacking in business acumen.

• Hire and Retain Key Employees - In addition to salary, employees look for benefits like health insurance from their employers. If you do not have small business insurance, you may fail to attract and retain the best talents.

• Protects Management - Directors and Officers Liability Insurance can protect the individuals who run your enterprise from costly lawsuits. It can also shield those who work in publicly traded organizations as well as nonprofit organizations.

• Protects Against Natural Disasters - Most states are prone to natural disasters such as fires, flooding, hurricanes, tornados, and lightning. Insurance can protect your assets in the event disaster strikes.

When it comes to business insurance coverage, it is easy to be confounded by the many coverages, forms, and documents that your clients require. Therefore, it pays to have a reputable insurance provider who can actively educate you on the type and the amount of coverage that's adequate for you. Our business insurance experts at East End Insurance Agency will help you find an insurance policy that suits your needs. Contact us today to learn more.