Insurance is an important part of business, but it’s easy to get complacent about it. When you’re starting out on a business venture, you’re going to have a lot of things racing through your head. Your products, your budget, your marketing strategies, your employees.
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All of these aspects are crucial cogs to build a strong company, and getting them right takes up time and energy – the same time and energy that is taken away from procuring the right insurance options.
This can be a hugely damaging mistake, however. Across the US, approximately 20% of new businesses fail within their first year, growing to 45% within five years, and 65% within ten. There will be many reasons for this, of course, but many of those reasons could have likely been solved with insurance.
What Insurance Policies Do Businesses Need?
Let’s start by looking at general liability insurance. Whether you’re in the retail space, the food and beverage industry, or any other industry that involves interaction with customers or clients, general liability insurance is a must-have policy that could be the difference between success and failure.
For those unaware, this type of insurance protects a business from claims related to bodily injury or property damage that occurs as a result of your business operations – click here if you want to learn more – and without it, your business could face numerous challenges that can easily get the better of you.
For instance, if a customer slips and falls in your store or restaurant, you’re going to be at the center of the fallout, potentially having to deal with the resulting medical expenses or even legal fees if the customer decides to sue.
With general liability insurance, however, you’ll have the financial protection to cover these costs, including any legal fees or settlements that arise from such claims. Essentially, it’s a safety net that allows you to focus on growing your business, rather than constantly worrying about what could happen if an accident occurs.
Another vital insurance policy for many businesses is product liability insurance. If you manufacture, distribute, or sell products, then you’re responsible for what you’re offering to customers, which means it’s your fault if a product causes harm. With product liability insurance, you can make sure your company is protected should the unthinkable happen. Furthermore, you will also be protected against defects in its design, manufacturing, and marketing, ensuring that any issues are immediately addressed before they escalate into costly lawsuits.
Do Too Many SMEs Get Complacent With Their Insurance Options?
As we mentioned before, any business owner starting out is going to have a lot on their plate – being complacent is not an indictment on your skills as an entrepreneur, but more of a symptom of the overwhelming business landscape.
The reality is, however, it can be a crippling mistake that can lead even a successful company to desolation. Accidents happen, products malfunction, and legal disputes arise, regardless of how prepared or diligent you are.
With this in mind, it’s your job to understand that insurance isn’t just a luxury; it’s a safety net that protects your company from a variety of risks. In 2025, it’s estimated that nearly 30% of small businesses in the US don’t have insurance coverage, with a further 75% being underinsured. At the same time, nearly 90% of US corporations experience a lawsuit at some point in their lifespan, proving how even the most carefully managed businesses can find themselves entangled in legal battles.
Without insurance, paying for these legal battles would be nearly impossible. Unless you’re a well-established company with a wealth of financial reserves, a single lawsuit can be enough to drain your funds and shut you down.
Indeed, a single injury at work, a hack into your system, or a damaged shipment can do exactly the same. So make sure you’re not one of the complacent companies, and take all the necessary steps to protect yourself.
I am a writer based in London, specialising in finance, trading, investment, and forex. Aside from the articles and content I write for IntelligentHQ, I also write for euroinvestor.com, and I have also written educational trading and investment guides for various websites including tradingquarter.com. Before specialising in finance, I worked as a writer for various digital marketing firms, specialising in online SEO-friendly content. I grew up in Aberdeen, Scotland, and I have an MA in English Literature from the University of Glasgow and I am a lead musician in a band. You can find me on twitter @pmilne100.
