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With over 30 million small businesses in the United States, it’s important that you do what you can to keep your business running and stay ahead of the competition.
One of the ways to do this is to protect your business, employees and assets with insurance.
While it may seem difficult to understand the ins and outs of the insurance business, it’s important for your business to do so. Read on to learn more about insurable risks so you can protect your business.
What is an insurable risk?
For a risk to be considered insurable, it must have the following key elements:
Measurable Loss
If you can’t measure a loss, there’s no way to insure anything. Because the insurance company must be able to attach a certain monetary value to things.
Unintentionally and unexpectedly
Another aspect of insurable risk is that it must be incidental. If, for example, a building burns down after a lightning strike, this cannot be predicted.
However, when an owner burns down their own business, it is intentional and expected. That’s why insurance companies investigate situations like this to make sure an accident really is an accident.
Predictable Opportunities
While an accident must be completely random to be insured, an insurance company must be able to calculate the likelihood of an event occurring. This is done using existing statistical data.
Not catastrophic
There are two ways insurance companies define catastrophe risk. The first way is the number of companies affected, and the other is a large financial loss.
Because of this, it’s difficult to get insurance for things like hurricanes, earthquakes, or nuclear failures that can affect large amounts of property and often wipe it out completely.
If you are concerned about catastrophic events, there are some insurance companies that specialize in this.
Big risk of loss
Insurance companies work because a large number of people pay into them and only a fraction of them make claims.
Because of this, a risk must apply to a large number of other companies who are also willing to pay to protect their company from the same risk.
types of business insurance
Let’s take a quick look at some of the types of insurance that most businesses need to fully insure against all types of insurable risks. Here are six types of business insurance options:
- Professional Liability Insurance
- Product Liability Insurance
- work compensation insurance
- business interruption insurance
- property insurance
- vehicle insurance
To get insurance coverage, you can contact a traditional insurance company or consider a captive insurance company, which may offer some advantages over other options.
Want to learn more ways to improve your business?
Now that you know what an insurable risk is, you have some ideas about the options you have to protect your business from such losses. Taking out insurance should be part of your risk management.
If you want to learn more about how you can improve your business, keep reading our blog. It is packed with information that can help any type of business grow.
