For entrepreneurs/small business owners, protecting the assets of their companies is a major priority. Today’s businesses face a myriad of risks brought on by weather, crime, health crises, and other factors that could place the company’s physical, digital, and intellectual property at risk. This blog post highlights some insurance and risk management considerations for entrepreneurs/small business owners.
According to a survey conducted by Marshall and Swift/Boeckh, 75% of businesses in the United States are underinsured by 40% or more. Underinsurance results from the absence of insurance or lack of adequate coverage for various occurrences/losses. Either situation can result in significant financial losses for business owners who are not prepared. We outline various insurance types for business owner consideration below.
General Liability Insurance – also known as commercial liability insurance can cover business owners and their companies for non-employee claims involving bodily injury, property damage, and reputational damage resulting from the business’s products, operations, or services.
Business Interruption Insurance – also known as business interruption insurance can replaces income lost during a temporary closure of a business resulting from property damage, fire, or other covered occurrences.
Cyber Liability Insurance – also referred to as cyber risk insurance is a combination of cyber insurance that can cover the costs of data breaches, cyber-attacks, and other losses related to cyber security.
Property Insurance – can help protect a business’s physical assets (property & equipment) in the event of fire, explosions, weather-related occurrences, crime, and other covered occurrences. Some of these insurances also cover losses of income from related occurrences.
Product Liability Insurance – can help protect a business in the event that a product that it made, sold, or distributed caused harm, personal injury, property damage, or other damage. Product liability insurance can provide financial protection against financial losses resulting from legal fees, medical costs, and compensatory damages brought forth against a business.
Commercial Vehicle Insurance – can provide coverage to businesses for physical damage to owned, leased, or hired vehicles along with providing bodily injury and property damage coverage for incidents where employees or owners of the business are at fault.
Professional Liability Insurance – also referred to as errors & omissions insurance protects business owners from financial losses related to claims/lawsuits for professional negligence, errors, or omissions. This type of insurance is popular amongst attorneys, consultants, accountants, and other service professionals.
Directors & Officers Insurance – can protect company board members and key officers from personal liability if they are sued by organizational stakeholders (employees, vendors, customers, etc,). This type of insurance can cover costs related to settlements, legal representation, and related costs that arise from such lawsuits.
Employment Practices Liability Insurance – can protect employers from employee claims that their legal rights have been violated by the company or other job-related claims. This insurance can cover the costs of legal representation and losses from employment-related claims.
Worker’s Compensation Insurance – can provide partial medical care and income protection, and rehabilitation costs to employees who are injured on the job or become ill as a result of their work. Additionally, this type of coverage can provide death benefits to families of employees who are killed on the job.
If an entrepreneur/business owner has questions about the type of insurance that can best protect their company’s assets, we recommend seeking the direct advice of an insurance broker. We also recommend conducting regular organizational risk assessments to identify any areas of potential financial exposure.