Why is Insurance Important in Trade?

February 28, 2021

Commercial trade insurance is critical for businesses in today’s competitive global economy. Insurance for trade and commerce enables businesses to create a robust risk management policy, while trade credit insurance protects them from customer bankruptcy and instability that can occur in foreign countries. There are several different types of insurance for trade and commerce that protect companies from specific issues and circumstances. Below, we’ll discuss the importance of insurance for trade and what the different types of insurance are for commerce. 

Trade Insurance Gives Organisations Financial Stability

Overall, credit insurance is critical for protecting a company’s bottom line from financial and organisational instability. Liability issues can quickly arise and lead to bankruptcy for the business and the owners. Entrepreneurs and startups should be aware of the importance of trade insurance before they start a business.

  1. Liability Insurance

Legal action from suppliers, business partners, and customers can expose a business to a range of risks, including bankruptcy. Liability insurance aims to protect companies from these specific risks that arise when someone tries to sue the business. Liability insurance is further broken down into several types:

  • General Liability: This type of liability insurance protects a company from financial obligations that happen because of negligence, personal injury, property damage, and other risks. 
  • Product Liability: Product liability insurance protects a company from financial issues that happen if someone is hurt because of a company’s unsafe or faulty product. 
  • Errors and Omissions: Errors and omissions insurance protects businesses from malpractice claims against clinicians, specialists, consultants, and other medical personnel. 

Without these types of liability insurance coverage, a business owner is personally liable for these types of litigious debts. Without trade insurance, a business owner could have their personal credit destroyed from litigation. 

  1. Property Insurance

If a business owns buildings, a company must have commercial property insurance coverage. Companies that rent their office space will also need renters insurance, another type of property insurance. These policies will protect a business from financial problems that happen if a fire breaks out, or if a building experiences hail or water damage. Property insurance also protects a business from economic issues that occur from acts of vandalism. 

An insurance broker may also encourage a business to purchase a peril-specific policy. This covers an individual business from certain risks that they may be more likely to experience. These policies also allow companies to exclude a high-risk item or items from an all-risk insurance policy. 

  1. Commercial Auto Insurance

For businesses that use vehicles as a part of their operations, they must be protected with commercial auto insurance coverage. Any productive vehicle, such as a delivery truck, company car, or construction vehicle that is critical for the company’s operations can be covered in these policies, which protect the business from liability if the car or truck causes property damage. 

  1. Employment-related Insurance

Workers’ compensation and unemployment insurance are essential to have for businesses that employ workers. Workers’ comp pays out claims if someone is hurt on the job. With unemployment insurance, the company is covered if an employee files for unemployment benefits. 

Niche Trade Credit is one of the most professional, dynamic, and trustworthy Specialist Credit Insurance Brokerages in Australia. We’ve been serving and protecting businesses from a range of liability issues for more than 30 years. Contact us today and see why business owners trust us with their insurance needs. Give us a call today 02 9416 0670.

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