There has been much discussion recently about the R-Word (recession) due in no small part to rising inflation and the resulting increase in interest rates. Some people wonder how a recession will affect their insurance policies and how recession-proof the insurance industry is.
Common questions
There is certainly collective anxiety about an upcoming recession that will cause a rise in the cost of gasoline and diesel, which in turn, will cause upward pressure on the cost of food products and other livable goods.
If an economy suffers a recession, the insurance industry can take a bit of a hit if enough workers lose their jobs, forcing them to cut back on spending. That being said, homeowners with mortgages are required by their banks to keep up their policies and most families try their best to keep life insurance policies in force.
Recessions
Generally speaking, the insurance industry is more recession-proof than most insurance companies, tend to be financially conservative and consumers have a need for insurance whether the economy is thriving or not.
During recessions, insurance companies may experience a downturn in insurance policy premiums due to policyholders reducing spending and downsizing insurance coverage.
Some types of insurance may not be regarded as necessary during inflationary periods such as travel insurance. Large life insurance policies may be reduced in bad economic time and many businesses often decide to cut costs during economic downturns, with insurance premiums being a common target.
However, that being said there are a number of reasons insurance companies fare better than most during recessionary times.
Why insurance is so important
A large part of any insurance company's revenue is premiums received through the sale of business insurance. Many businesses lease their premises and, in doing so, are required as part of the lease agreement to have business insurance coverage in place. As a business owner, your company can be protected against the following types of losses.
Business stoppage due to:
Box truck insurance
A common type of business insurance coverage for companies in the delivery or cartage business is box truck insurance. It is a specific auto insurance policy designed specially to meet the needs of the trucking businesses.
Also called commercial truck insurance, box truck insurance provides coverage for trucks when involved in an accident. As well as providing collision coverage, the policy also provides comprehensive coverage that covers damage such as smashed windows, fire, theft, and 3rd party.
Whether your business employs a single box truck or a fleet, regardless of the state of the economy, you need insurance coverage. Box truck insurance cost does vary and it pays to shop around. Costs will be determined by the size of a fleet, the age of the trucks, and what deductible is chosen. If a truck owner and assuming you have a respectable driving record, you can pay anywhere from $8000 to $15,000 per year, depending upon the factors mentioned.
Some insurance is better than none
Keep in mind, if the economy is in recession and business is not as brisk as it should be, it is a false economy to scrimp on business insurance.
Keep in mind, recessions are an unfortunate aspect of today's global business world. Recessions are often the cause of layoffs, reduced pay, demotions, and overall budget cuts. Business owners have to do what they can to keep a company afloat, but cutting back on business insurance is not good business practice.
Good business Insurance is always needed and it if you have to cut back, always keep in mind that some is better than none. Insurance is a very important part of today's society and takes some of the uncertainty out of running a business and more so when a recession has overtaken the economy.
Risks to property, health, and business operations will never disappear and that is why both personal and business insurance is so critical.
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