Major Risks of Operating Your Business Without Business Insurance

Insurance is something that everyone has in some area of their life. For your health, you have health insurance; For your car, you have car insurance; And for your home or rental property, you have homeowners or renter’s insurance… So how come when it comes to businesses, business insurance is something that slips people’s minds?

Most business owners don’t forget about business insurance when they own brick-and-mortar stores because a lot of those risks are tangible. But when it comes to online businesses, business owners tend to feel like they don’t need it.


Why is that?

Well, for one, lots of business owners running home-based businesses have the misconception that because they’re running their business at home that any damages that occur while working at home will be covered by homeowner’s insurance… Wrong! Homeowner’s insurance doesn’t cover any losses or damages to anything involving your business, whether it’s tools or equipment.

Secondly, they’re just completely unaware of the major risks involved in running an online business. They think that just because they don’t have a physical store that their business is at a lower risk… To debunk that theory, the truth of the matter is that online businesses may be at an even higher risk of losses and damages from cyberattacks alone.

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Cyberattacks have cost small businesses over $200,000 in damages, and according to, 60% of them go out of business within six months of enduring the damages. Most business owners believe a cyberattack won’t happen to them, but it’s not until their customers’ sensitive data has been compromised and they’re being sued, that they realize the importance of business insurance.

To be fair, business insurance isn’t necessarily one of the legal requirements to start a business (depending on where you live and what you’re selling), but it is a legality that’s extremely wise to have. There are different types of business insurance policies out there with different types of coverage. All you have to do is determine which policy will give your business the most coverage.

Nonetheless, business owners are still stubborn to the fact that business insurance is a crucial necessity for their business… One business litigation case or disruption in business has the potential to end your career as an entrepreneur in an instant.

If you’re operating your business without business insurance, here are some of the biggest risks you’re putting your business in danger of.

Risks of Operating an Uninsured Business

Breaking Local Laws

As mentioned earlier, business insurance isn’t necessarily a legal requirement, depending on where you’re operating your business. But, you need to check the local laws of your area because cities and counties in every state have very specific laws in place about business insurance coverage.

If you have employees, most states will require you to carry worker’s compensation insurance and general liability. If your business is caught breaking any local laws, you could receive hefty fines or another form of legal action.

Property Loss

Property loss is the type of damage that lots of people tend to think that homeowner’s insurance covers and it doesn’t.

Let’s say that your home endured a flood and your work desk, computers, and printer were completely ruined due to water damage or that a fire ruined your entire home office… Property loss of your business equipment and furniture would be covered through your business insurance policy…

Not having business insurance would mean that you’d have to come out of pocket to replace those items.

Not Protecting Your Employees

Your employees are who keep your business running, whether it’s through excellent customer service or helping your daily operations run smoother… Without them, it can be pretty hard to keep your business afloat. That reason alone is why it’s so important to make sure you protect them.

Let’s say your employee incurs an injury on the job and is sent to the hospital or needs to have time off of work… You’re not only going to have to be responsible for their medical costs but also for their loss of income as well, should they seek damages. Worker’s compensation insurance will cover all of those costs for your employee.

Business Interruption

Business interruption is exactly as it reads… an interruption in business. If there’s anything that interrupts your business’ daily operations, which in turn, causes your business to not bring in revenue, that’s a major interruption to your business.

A business interruption can be anything. Everything from natural disasters to fires, each day you lose business, you’re financially setting your business back. Without business insurance, you’d not only be paying for damages and repairs out of pocket but you have the potential to be losing customers, which also translates into losing money.

What Will You Do?

As you can see, whether you have a brick-and-mortar store or an online business, you’re up against all kinds of risks that business insurance can protect you and your business from. It will be in your best interest to take a thorough look at your business to see all the potential risks you’re up against to see which type or types of insurance policies will provide you with the most coverage.

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