Business Insurance

A lot goes into running a successful business, but in the long term, one question matters most: are you making more money than you’re spending? If the answer is no, your business model isn’t sustainable. If the answer is yes, the follow-up question is usually about how you can make more.

While most business owners get this right away, they tend to be less familiar with the role insurance can play in boosting that revenue they earn. If you’ve never stopped to think about how business insurance can help you grow, then consider these four possibilities.

Work with Bigger Clients

It’s no secret that bigger clients pay more.

But they ask for more from their service providers, too. Those demands usually include general and professional liability (also called errors & omissions) insurance policies with certain limits, often $2 million. While it’s fine to acquire insurance or increase your limits when a client requires it, already having coverage in place would send an even more powerful message.

When you have robust liability insurance, you demonstrate to potential clients that you…

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Are a serious business

In the Internet age, anyone can start a website and call themselves a consultant. Insurance is one of those professional touches that sets you apart from the competition.

Are ready to start work immediately

Business moves fast. Having coverage in place means you’re ready to sign a contract when an opportunity arises, so you can get down to work faster.

Have the financial wherewithal to weather a lawsuit

If something goes wrong, most uninsured businesses don’t have the funds to settle or even defend against a major lawsuit, which means the plaintiff will have to accept a loss.

Offer Higher-Value Services or Products

As you gain experience and expertise, it’s natural to expand your offerings into higher-value services, and doing so can significantly boost your revenue.

Naturally, this is great for your business—but it can lead to trouble if you don’t adjust your insurance policies to reflect your new income. There are two major reasons why:

  • Many insurance policies are priced partly based on revenue. Businesses with higher revenue have higher risk exposure and are likely to face more expensive lawsuits. If your revenue increases significantly from year to year and you don’t update your policies, you risk getting denied coverage when you make a claim.
  • Business interruption insurance, a policy that can pay your expenses if your business is forced to close by a covered property event, can also make payments to replace revenue you would have brought in during the closure. If your revenue has been growing but you haven’t updated your policy, you’ll only be eligible for the income you were earning when you bought it, preventing you from continuing at your normal pace of growth.

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The good news? It’s pretty easy to call your agent and make policy updates as your business grows.

Hire Employees

At a certain point, a business can’t grow without adding people. Hiring employees is an exciting milestone for any business owner, but it also brings an entirely new set of logistical challenges: taxes, benefits, and workers’ compensation insurance.

Workers’ compensation is the only type of business insurance legally mandated throughout most of the country. While laws vary, most states require a business to purchase workers’ compensation as soon as it hires a full- or part-time employee. This coverage might feel like one more unwelcome expense, but it’s critically important. Not carrying it could result in fines and penalties! Plus, if your employee gets hurt on the job, you could be liable regardless of whether you have coverage.

Think of workers’ compensation as another essential support structure for employees—right alongside a computer, desk, and software license.

Stick to Your Initial Growth Projection

A business plan is a hopeful document. It lays out how exactly a new venture will succeed. But what happens when…

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  • A fire burns down your office and all your equipment?
  • A customer slips in your store, breaks a leg, and sues for medical costs?
  • Your only employee gets carpal tunnel syndrome, needing surgery and three months to recover?

If you don’t have insurance, you can throw your business plan out the window. But if you do have adequate coverage, you can probably get back to normal with minimal financial loss. The key to staying on track? Work with an agent who can recommend appropriate policies for your industry and risk exposure.

With the right business insurance policies in place, you can stop unforeseen expenses from derailing your revenue growth.


Interested in learning about business insurance, starting a business or growing a business in Santa Barbara? Contact us today for your free business consultation! Call Santa Barbara Entrepreneur at our Impact HUB location (805) 633-0877.