Authored by Natalia

Insurance Policies And Their Risks

It is an insurance policy that covers a company loss of income due to slow down in its normal operation or a temporary halt due to damage to its tangible property. Coverage usually incudes loss of income minus normal operating expenses. Coverage is applicable during the period required to repair or replace damage property. This policy may also cover loss of rental income. If you are running business on a large like iron mills scale or small like candle company it doesn’t matter you have to be insured business. See candle company start from home making which is on small scale manufacturing still you need candle company insurance to protect your business from fire and smoke or by any natural disasters.

 Other than property risks

Reputation is also "currency". Poor quality of products and services, fraud, violations of business ethics, personal data leakage, lawsuits, negative reviews - a good name can be lost in many ways. It is rather difficult to predict the consequences of reputation risk: some deliberately use black PR, provoke a scandal in order to be heard by everyone. But such behavior, accidental or intentional, can lead to the opposite effect: the churn of customers and partners, and, therefore, to a decrease in profits - and then the reputation risk can lead you to financial risk.

 Risk of a legal entity

By law, commercial legal entities, that is, companies created for entrepreneurship, are liable for obligations with all property. But the legal entity is the company itself, not its founder or individual participant. Signs of a legal entity has its own property. A car, a house, equipment, any things that do not belong to either the founders, or the director, or employees, but purchased on behalf of the company itself. Legal entities are full-fledged subjects of law, they have will and desires, which are determined at meetings of shareholders and boards of directors.

You can take away all property from the company for debts, declare it bankrupt and liquidate it. The founders themselves can only lose the money that they have invested in the organization, but at the same time they do not risk their apartments or accounts. The legal entity has property that cannot be confiscated. So, for example, they cannot collect the indivisible fund of an agricultural cooperative (livestock, feed and transport, except for cars).

However, it is worth remembering that such limited liability works only if the debts did not arise through the fault of a specific person, founder or member of a legal entity. If the company suffered losses or went bankrupt because of the participants and their guilt is proven by the court, then the perpetrators have subsidiary liability - they will have to pay off debts from their own money.

If you bought a product and could not sell it, having suffered losses and remained in debt, you took a risk, lost the money of a legal entity, but did not lose what you personally had. But if the director of the company is caught in a fraud, then he will answer with money, property, and freedom - after all, there is criminal liability.

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