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What Could Happen if a Business Doesn’t Have Commercial Liability Insurance?

| July 22, 2022, 08:00 AM

In the modern world of commerce, it is a fact that accidents at work and adverse incidents can and do occur. It is important to understand that we live in an environment where legal claims against organizations are common occurrences. It is estimated that the average cost of a legal claim brought by an employee against their employer is around $160,000. This is a significant sum of money for any organization, but for smaller companies, it can result in bankruptcy or the inability to continue trading. By ensuring that your business has adequate levels of commercial liability insurance, you are protecting it from a multitude of risks that may have serious financial implications. This article explains three examples of why not having such insurance could be potentially disastrous for any business.

Sole proprietors are at direct financial risk

Many smaller firms are operated by a single owner who is the sole proprietor. This is a suitable way to organize many small businesses in various sectors. However, a sole proprietor bears the risks of financial costs arising from accidents and adverse incidents directly on their shoulders. Any costs incurred by uninsured sole proprietors will come from their personal finances or the assets and revenues of the business they own. For example, imagine that you are the sole proprietor of a small construction firm. One day an employee suffers an injury during employment on the site and takes legal action as a result. If the court leans in the employee’s favor, this may result in legal bills, costs, and resultant compensation that can easily run into hundreds of thousands of dollars. Without adequate commercial liability insurance, these costs would have to be covered by the sole proprietor.

It may be a legal requirement

Depending on which country you operate in, it may be a legal requirement to have certain business insurance, including commercial liability insurance. In these circumstances, an absence of such insurance plans is likely to result in being liable to receive fines, penalties, or even legal action as a direct result of noncompliance. In addition to a legal requirement, other companies you trade with may insist that you have suitable levels of commercial liability insurance to protect your organization and theirs in the day-to-day trading. If you are a business owner and have any doubt about the levels of commercial liability insurance that you require, it makes sense to contact experts in this field, such as KBD Insurance. By speaking to specialists, you will be fully informed of the levels of cover you require and get the protection you need.

Loss of credibility

As the last point, it is worth considering that in 2022 companies are expected to hold suitable and relevant levels of commercial liability insurance. Your organization will not look credible to other firms and the public if you do not have the necessary insurance. A business in this situation effectively sends out a deeply unprofessional message that suggests that key parts of its operation and administration are being overlooked. This may result in an adverse perception of the company and can also result in difficulties finding trading partners or raising outside capital.

Arts Alive | Maryland Hall

Category: Local News, NEWS

About the Author - Stephanie Maris

Stefanie is a local blogger and social media content marketer from Maryland and most recently a wife and a mother. She has an unhealthy obsession with puns, sarcasm and caffeinated beverages.

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