Abram Interstate Insurance Services, Inc., CMGA

Helping Independent Insurance Agents Since 1996

Are you rich enough or poor enough to go without insurance?

Published on October 20, 2012

Whether you can afford to be without commercial lines insurance on your business depends on the answers to two questions. First, are you rich enough or poor enough to risk the unexpected and unknown? Second, do you do anything in your business that might cause harm to you or anyone else?
Let’s look at our second question first, and I will re-phrase. Do you do anything-anything at all- in your bbusiness? Do you drive a company car? Sell something? Manufacture something? Entertain a client? Shop for supplies? If so, you may be sued. Do you send your secretary to the deli? Allow customers or clients on your premises? You may be sued. You can be sued for errors caused by your employee or partner. In our litigious world, jury awards often bear no relevance to the error committed. If acustomer or visitor falls on your property, the award may depend upon the severity of the injury.
Therein lies the importance of the first question: the extent of your assets. If you own none of your products, supplies or premises, or all your assets are mortgaged to the maximum value, you may be willing to take the risk of doing without insurance. If you earn a profit, or expect to, you own something of value: your earning capacity. Losing a sizable lawsuit could sentence you to minimum wage income for the rest of your life, unless you change your name and move to Canada.
If you have assets, you could lose everything. The more you own, the more you stand to lose, because attorneys like to sue people with deep pockets. So, unless you are very rich indeed, it does not pay to operate without insurance.
A caveat: insurance laws differ in every state. If you sell your product or travel across state borders, be sure to discuss interstate insurance with your agent. Make certain that your coverage meets the requirements of each state in which you do business. Check your contract to make sure the policy extends there.
Insuring or not is a decision only you can make.