Some forms of insurance, such as workers' compensation, are even mandated by law. 4 Key Questions Believe it or not, some people are insurance-happy, says Jerry Glenn, CEO of Western Sentry Insurance Brokers, a California commercial and industrial insurance broker. They'll insure themselves against any eventuality, no matter what the relative risk is. And that can needlessly eat into a business's bottom line. Before you sign on the dotted line, think about the purpose of insurance.
Insurance is used to recover from materially injurious events, period.
But chances are you don't need all of it. Workers' comp covers the cost of medical treatment and lost income for employees injured on the job. A business can be hit with severe penalties for failing to have a workers' comp policy. A business will also want general business insurance. The advantage to buying it as a single package is the same as buying an entire car vs. buying the parts of a car and assembling it yourself, says Glenn.