Many owners of small businesses assume that their need for commercial insurance is much less due to the scope of their business. However, nothing could be further from the truth.
Actually, smaller businesses can be hit much harder if a claim is made against them. Although not legally required, any small business that does business with the public should have public liability insurance.
The reason is that smaller businesses have much less capital; therefore, should one be required to pay a claim, it could cause the business to go bankrupt. Having public liability insurance could have prevented this from happening.
Usually the claims made against businesses are because the claimant was injured or their property received damages due to what they believed was negligence on the part of the small business. Some businesses also believe that if they are not liable, meaning they are not at fault, then they will not incur expenses. This is actually quite false. Often – even if a business is in fact innocent of the claim – they must seek the services of a solicitor. With all of these legal fees as well as possible court time, a substantial legal bill may be incurred. Some claims never go to court but can be settled out of court. Again, this can seriously deplete the capital of any small business.
Starting up a small business is expensive. Some business owners forgo the public liability insurance coverage to save on expenses. They feel that it may be an unnecessary expense where they can save a little money. However, when a small business takes into account the expense of the insurance in comparison to the possible savings if a claim is made, it is well worth it. Today, claims are made much more frequently due to the manner in which solicitors assess fees for these claims. No money is paid unless the claim is successful.