Are there any gaps in your small business insurance plan?

When you’re a small business owner, you pour yourself into building up your business’s name and reputation in your community. We don’t like to dwell on the negatives and the what-ifs that distract us from the now. But the reality is that if you don’t take measures to protect your business from the future you could find yourself in the devastating position of having to shut your business down. It only takes one disaster, one stroke of bad luck, to spell doom for a small business. That’s why there are so many different types of small business insurance – to protect your business from its specific and unique risks.

Your business faces many different perils every day, and there are corresponding small business insurance coverages to protect you from them. Here are ten of the most common perils and insurance coverages that you might want to consider for your business. As you read through the different types of coverage that are out there, think about your business and whether or not there are any gaps in the coverage you currently have.

1. Property insurance.

Think about your premises. Get a good mental picture of it. Your facility – whether it’s a store, office, or workspace, could very well be the largest asset to your business’s name. That’s why it’s so important to make sure that it’s protected from disasters big and small.

To make sure that you have a property insurance policy that fits your business needs, figure out what the biggest threats to your business are. Knowing what you need to shield yourself from is the first step of the battle. Keep in mind that most property insurance policies will cover the replacement value of the building itself, meaning that it will be replaced as if it were new, but the actual cash value of the contents of your business, meaning that the insurance company will pay the depreciated value of the contents of the building.

To figure out how much coverage you need, you need to take an inventory of all your business’s assets. You need to consider how a loss could affect your business and figure out which losses are the most likely to hit your business.

2. Business interruption insurance.

Business interruption insurance often gets overlooked, but it’s a lifesaver for businesses that are faced with a disaster (like a fire) that causes them to temporarily close their doors. It takes time to bring a building back from a disaster like that, what with all the rebuilding and repairs that need to be done.

Does your small business insurance plan include business interruption coverage?

Yes, property insurance is there to cover the costs of rebuilding the facility itself. But it won’t help you out with your lost profits, and it won’t cover the expenses of working out of a temporary location. Those hits could be fatal to a business. To keep a business afloat, BII covers extra operating expenses and the lost income that result from a disaster (depending on the plan you choose.)

Small business insurance is great and all, but it’s important to be prepared for a temporary closure due to a disaster. If you’re caught off guard and don’t have a plan for what to do or where to go, your employees could be out of work and your brand could suffer.

3. Liability insurance.

Anything can happen – surprises of the unpleasant variety included. Your business faces many different forms of liability, which is why it’s important to know how to control your liability risks. Commercial general liability insurance covers claims of bodily injury, personal injury like libel or slander, advertising injury, and property damage.

The goal of a commercial general liability policy is to let your business carry on while you’re dealing with a claim of negligence. CGL also helps cover the costs of defending and settling claims. Don’t underestimate how expensive legal defense can get. You’ll be in for a not-good surprise.

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4. Key person insurance.

You know how in most businesses there’s that person that makes the world go round? Like, they’re that person who keeps everything running? Well, your business probably has one, too. Imagine what would happen if that person were no longer in the picture. What if something sudden and tragic, like a death or disability, happened? Would your business go on, or would your reputation and profits suffer? How would you cope? You’d also have to find a replacement for that person, and that’s not easy.

If something happened to that person, things would probably go all topsy-turvy. But key person insurance can give you some stability while you figure out how things are going to go on.

5. Workers’ comp.

Okay, so there were two guys and a ladder…

A workplace accident can become a really big deal really fast. Accidents happen in a split second, but the effects can go on for much longer than that. Do you know what you would do if one of your employees got hurt on the job? Do you understand your obligations to the injured employee?

Workers' comp is an essential part of any small business insurance plan.

The most important thing is making sure that the employee gets the treatment they need, of course, but you also have to consider the expenses that come from the accident. There are the medical costs, sure, but there are also lost production time and your workers’ comp insurance premiums to consider. Those tend to go up when someone gets hurt.

The best way to manage your workers’ comp costs is to stop accidents before they happen. Make sure to identify and control your risks. Make safety a thing that the cool kids do. Have proper procedures in place to investigate accidents (and near-misses) and handle them. Implement a safety program and stick with it.

6. Cyber liability.

Technology and computers are becoming an increasingly important part of our lives, which is why cyber might need to be part of your small business insurance plan. We depend on them. Businesses might store customer information on their computer systems, which are vulnerable to data breaches and viruses. You might not have access to an IT department that could bolster your defenses, so you might be vulnerable to hacks.

To reduce the technological risks that you face you can think about getting a cyber insurance policy, introducing preventative measures to keep your system from getting hacked or virused, and amping up your cyber security.

7. Environmental exposures insurance.

What? I don’t have a mining business, or a manufacturing business, and I don’t mess with radioactive stuff! But it’s not just these businesses that might find themselves in trouble when it comes to the environment. Does your business have any environmental exposures? It’s important to really think about it because most commercial insurance policies have specific exclusions for pollution.

8. Employment practices liability insurance.

There’s a very good chance that your business could face an employment-related lawsuit from a past, present, or prospective employee. There might not be any substance to the claim and it might not come to anything in the eyes of the law, but defending your business against these accusations gets very expensive very fast.

Employment practices liability insurance helps covers the cost of things like wrongful termination and discrimination lawsuits. You won’t have to worry about how you’re going to come up with the money to go to court.

Make sure that you don't accept more risk than you bargained for in contracts.

9. Supply chain insurance.

If your business relies on third-party suppliers, you’d be in big trouble if your vendor faced a disaster or problem that meant they couldn’t give you the supplies you need. Your production might go into a tailspin, and you might find yourself on the receiving end of a disgruntled customer’s wrath.

Yes, you can have a contingency plan and you can do everything in your power to manage your risks, but supply chains have gotten to be so global that you might not always have direct control over your risks. Supply chain insurance is meant to cover losses that happen when your supply chain goes topsy-turvy. So, when you’re on the phone with that very upset customer, you’ll be able to present a solution that’s a bit more satisfying than “Umm, well, I can … yeah, I got nothing.”

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Any of these insurance coverages could become a real lifesaver to your business if a disaster happens. Sometimes things are completely out of your control. But sometimes we can prepare. Small business insurance is key to protecting your company, but prevention, training, and scheming – a.k.a contingency planning – are also crucial if you want to give your business a chance of weathering a (figurative or literal) storm.

When you’re thinking about your small business insurance, you need to be on the lookout for gaps in your coverage that might leave you open to risk. If you find any gaps, you need to talk to your agent and figure out a way to close the gap. You want to make sure that your business is completely protected. You wouldn’t take an umbrella with holes in it into a rainstorm, would you?

If you want to chat about your insurance policy or shop around for some small business insurance rates, let us know! You can give us a call or fill out our quote form, and we’ll help you build a customized insurance plan that’s gap-free.