Insurance

The use of insurance is appropriate when businesses keep failing. If your wife's business is in a sector where new businesses routinely fail and leave personal clients out of pocket, well, I appreciate that it's tough finding the money but wider society has to prioritise ensuring nobody gets screwed over the inconvenience for your wife. In fact arguably the insurance, though expensive, is helping her because without it clients would have to assume her new untested business is likely to fail and stay away.

The idea that clients should insure themselves is inefficient. It can work when clients are all or mostly corporations, though it will usually be inefficient even then. But for ordinary consumers it's ludicrously inefficient. The acquisition costs per customer may be slightly lower, but the insurance has many more customers, so overall a lot more resource is wasted. Where possible laws should put insurance requirements onto the larger entity which will usually be the supplier.

We _could_ say that everybody living in my building needs to take out an insurance policy in case the building burns down. If it happens, the insurers all pay out, together we buy a new building, everything is fine. But that's very inefficient. What actually happens is much better, the building's owner (maybe all the residents jointly, in my case a brass plate company in a tax haven) has to buy insurance and post proof to all residents, and they bill everybody for a share of the insurance along with the other costs of running the building, like elevator maintenance and painting the corridors.

The US has a lot of deliberately anti-competitive policies which can give the idea of regulation a bad name, rather than compete by offering a better service it turns out it's cheaper to "persuade" politicians to pass a law saying nobody is to compete with you, or indeed not to pass a law which would render you obsolete (title insurance, tax filing, and dozens of other things that needn't exist but still do because the campaign donations roll in from those selling them). So I'm not suggesting that every type of business ought to have insurance against the consequences of failing, just that it's a sensible remedy if an industry has this persistent problem the way that banks, and package holiday companies do, and the other poster suggested IoT manufacturers might.