As a business owner, do you have the right insurance policy?
Let’s say you started your business 10 years ago with just a small space and computer desk. Today, you have an office full of employees and equipment. If you still have the same insurance coverage as you did a decade ago, or even just a few years ago, the chances are high that you are underinsured.
One of the biggest mistakes owners of growing businesses make is not keeping up their insurance coverage to account for the expanding assets and potential liabilities. To avoid this mistake and ensure you have all of your assets covered, you should review your business insurance program annually. Circumstances change, and without a yearly review, you could be faced with substantial expenses if you suffer a loss.
Business Insurance Coverage
It’s common for small businesses to start out with basic insurances, such as commercial property and general liability policies. However, as they grow, most owners need other types of insurance. Some examples include:
- Excess liability or umbrella
This covers claims exceeding your standard policy’s limits.
- Workers’ compensation
This type of insurance will be required in most states after your business hires its first employee. Workers’ compensation is necessary to provide payments for an employee’s lost wages and medical expenses following a workplace injury.
- Professional liability
This form of insurance covers your service-provided mistakes. It usually covers attorney fees as well.
- Auto, hired and non-owned
If an employee were to cause an auto accident in their personal or rented auto, this insurance would protect your business.
- Commercial auto
This provides additional coverage that is not listed under personal auto policies. Commercial auto insurance should cover dealings with your business, such as injuries sustained by employees while unloading and loading merchandise.
- Employment practices liability
This provides coverage for HR issues, such as those related to termination, harassment and discrimination laws.
- Directors and officers liability
This provides financial protection for directors and officers should they be sued for wrongful acts stemming from performance of their duties.
- Employee benefits liability
This insurance covers liability issues from an omission or error in the administration of an employee’s benefits that results in the employee incurring a cost, such as a terminated worker losing benefits after not being provided with COBRA information.
Factors to Consider while Conducting Annual Insurance Review
Depending on your business, many of the above coverages may be essential to adequately protect your firm. An annual insurance review is an ideal time to discuss your needs with us.
Ensure the following elements are considered as you begin the review:
- Revenue
More business is good, but it also means a greater potential for liability. Have your annual sales changed?
- Property
Have you added equipment, computers and such that would create a need to increase your commercial property policy’s limits?
- Location
Your business owner’s or general liability policy could be affected if you’ve added, closed or moved locations.
- Travel
A hired and non-owned auto policy may be needed if your employees are frequently driving rented vehicles.
- Employees
Have you had an increase in your workforce, turnover rate, or use of contractors? Consider employment practices liability insurance for high turnover rates. The more employees you add, the more you’ll pay for your workers’ comp coverage.
- Services
Are you offering additional services? For certain types of work, you may need additional endorsements to your general liability policy.
- Customers
Are you serving new clients or industries? This may cause problems with your professional liability policy if you’re servicing high concentrations of high-risk clients/industries.
The Takeaway
The answers for each of the above won’t remain the same over a business’s lifespan, and that’s why insurance isn’t a one-size-fits-all, unchangeable product. Annually review your business for exposures and insurance needs. Insurance may not cover everything, but it can certainly mitigate your risks.
Start your annual business insurance review today by setting up a meeting with us to discuss the above issues and how they relate to your current insurance needs.
