The Basics of Business Insurance

By Diane Tait

Image courtesy picpedia

Businesses come and businesses go.  That’s a fact, since 2/3 of new businesses fail to make it through their first two years.  While some of the failures are due to stiff competition, poor management and planning or market downturns and insufficient capitalization, what most business owners fail to realize is that there are many external factors that can scuttle even the strongest of firms that have nothing to do with COVID-19, the economy or the competition.  In this week’s blog, I’ll show you ten ways that business insurance can keep your business afloat through the toughest of times.

      1.      Business Liability Insurance – Today your business might be flying high, but tomorrow you or one of your employees may inadvertently do something that causes harm to one of your customers.  Or, a customer or visitor to your place of business may slip and fall in your office.  Either of these situations has the potential to result in a lawsuit that could bankrupt your business overnight.  Even the cost of defending your business against a lawsuit can be a lengthy and costly affair, whether you win or lose.  Just the cost of mounting a defense could set you back tens of thousands of dollars in legal fees if you have little or no liability insurance.  If you were covered, not only would any judgments against you be paid by your insurer up to the limits of your policy, but the insurance would also cover the costs associated with defending you in court. 

      2.      Do you manufacture or distribute products? – Product liability insurance can protect your business from any product defects or distribution problems that can occur when you introduce or market your products.

     

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3.      Cyber Insurance – Another thing that could harm your firm is if someone were to breach your cyber-security and either lock you out of your company computers or rifle your files to steal sensitive client information.  Should either of these occur, it could be weeks or months before your business could function again.  Even worse, should your clients find out that your computers were breached, you could wind up being.  Talk about a perfect storm.   Cyber liability insurance covers you from financial losses that occur as a result of any data breaches.  This includes damages to your business as well as any that should result to third parties, loss or damage to electronic data, loss of income, cyber extortion, and even damage to your business reputation.

      4.      Protect your employees and protect you from your employees – Should one of your employees get injured on the job, Workers’ comp insurance can protect your business from the costs associated with medical reimbursements, lawsuits and death benefits. 

      5.      Property Insurance – Whether you own or rent the space in which your business operates, there are several factors that can cost you big if you aren’t properly insured.  What happens if your building catches fire or a hurricane breaks a window to let the rain into your office?  How much of your business equipment, furnishings and fixtures could wind up ruined?  Or, what if your office is burglarized or the office above yours has a pipe burst that winds up inundating your office with extensive water damage?  How would your business cope?

      6.      What if one of your partners or another key employee were to die suddenly?  Nobody plans to lose a key cog in the machine of commerce, but death can happen in an instant.  If you don’t have a key-man policy to cover your business for such a loss, the next obituary could be for your company.

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      7.      Baby you can drive my car. – Whether your business has company vehicles or not, every time you let an employee drive your car to pick up lunch or make a delivery, if they were to have an accident, your personal auto insurance could be rendered null and void.  Even if you do have company cars, if you or and of your employees have an accident while on company time that results in injuries to another party, your business could wind up being sued.  Commercial auto insurance can protect your business from any such circumstance.

      8.      Umbrella insurance can turn a frown upside down. Depending on your business needs, you could require coverage or limits that exceed your current liability limits.  Or, maybe your business manufactures liquor or owns a boat that it uses to entertain clients.  Getting several additional insurance policies could prove to be costly.  A far more cost-effective way to secure the coverage for any or all of the above would be to acquire an umbrella policy.  This way, your insurer can add to or extend your liability limits to protect your business from harm that your current liability policy may exceed or clude.

      9.      How can a BOP keep your business from getting bopped?  A business owner policy, otherwise known in the insurance industry as a BOP, combines property and liability insurance in one neat package.  A BOP typically can also be used to protect a business owner from business interruptions and other covered perils such as theft, car crashes and floods.

      10.  SOHO, so what? If you run a small business out of your home, you’re classified as a SOHO (Small Office, Home Office).  While many SOHO owners don’t think they need business insurance, this assumption could come to cost them dearly.  That’s because homeowner’s policies have limits and exclusions that come into play if you run a business from home.  If a customer or delivery driver should injure themselves inside your home, your insurer may deny the claim if all you carry is a homeowner’s policy.  The same could occur should any office equipment you use for business purposes wind up damaged, destroyed or stolen.

Diane Tait owns and operates A&B Insurance.  To find out more about how you can save money on insurance, go to her site or fill out the form at right.