It's important to know the potential risks your business could face. Here are the top 10 threats facing small businesses — and how the right coverage can protect you.
Property holdings are often a small business owner's largest asset. Therefore, for the long-term security of your small business, it is vital that you evaluate potential threats to your property and develop a plan to manage those threats. Begin by taking a complete inventory of all your assets to determine how a loss might affect your business and how much coverage you need. Property coverage can come in many forms to suit your specific needs, but a typical policy will provide the replacement cost value for your building and the actual cash value for your business property. You have a lot weighing on your budget already, but don't make the mistake of planning for the "best case scenario" when it comes to your property coverage. Leaving your small business underinsured is a risk too great to take.
The U.S. Department of Labor estimates that more than 40% of businesses never reopen following a disaster such as a fire or flood. Is your business prepared to weather the storm if disaster strikes? If a fire causes the facility to be temporarily unusable, ideally you would move to a temporary location, but traditional Property Insurance does not cover this move or the loss of income while the permanent location is being repaired. To mitigate this risk, consider adding Business Interruption coverage to your Property Insurance policy. This invaluable coverage safeguards your business by covering operating expenses and lost income while the permanent business location is being repaired.
No matter how well you plan, running a small business can be fraught with unexpected surprises — the only way to completely avoid liability is to shutter your business. Smart business owners protect their assets by carrying adequate Commercial General Liability (CGL) Insurance coverage. CGL policies provide coverage for claims of bodily injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations. A CGL policy with adequate coverage limits enables you to continue normal operations while dealing with real or fraudulent claims of negligence.
Many small businesses are built around the talents and expertise of a few individuals. If an employee crucial to the functioning of your business departs unexpectedly due to death or injury, would day-to-day operations continue as usual? Would you be able to maintain your current level of performance and revenue stream? Key Person Insurance can help you answer these questions with confidence. This coverage is designed to provide financial stability in a time of stress and uncertainty, allowing you to keep your business moving forward without missing a beat.
Small business owners, especially those with less than 10 employees, often struggle with understanding their employee health and safety obligations. Just like their larger counterparts, small businesses have the same responsibility to indemnify workers who are injured during employment. Beyond initial treatment costs and lost production time, on-the-job injuries impact insurance premiums for years to come. By managing exposures and promoting safety, it is possible to control workers' compensation premiums. Having proper pre- and post-accident procedures can drastically reduce the severity of a claim.
Small businesses often lack a formal IT department or even rudimentary internet security measures, which leaves them vulnerable to cybercriminals. With an estimated liability of more than $200 per compromised record — multiplied by hundreds or thousands of customer records — the cost of a single data breach can be devastating. If your business stores customer records electronically, it is crucial that you have robust security measures in place. Specialized technology coverage such as Cyber Liability Insurance can help protect your business against damage from cyber attacks, data breaches, and other internet-based exposures.
Most people think of large manufacturing, mining or petroleum operations when environmental exposures come to mind, but these are not the only industries at risk. It is important to perform a comprehensive risk analysis to determine your own level of exposure. Keep in mind that because most commercial insurance policies contain pollution exclusions, unless you carry Environmental Insurance, you may be uninsured against significant environmental loss exposures.
From the moment you begin the pre-hiring process until the final goodbyes at the exit interview, you are at risk for a lawsuit. In fact, three out of five employers will be sued by a prospective, current or former employee while they are in business. Although many lawsuits are groundless, defending against them is costly and time-consuming. Employment Practices Liability Insurance will protect your company against wrongful termination, discrimination (age, sex, race, disability) or sexual harassment lawsuits.
When first starting out, many new business owners simply don't have the time or expertise to adequately evaluate each clause in everything they're signing. This oversight can create major problems down the road. In many cases, small businesses become saddled with large additional risks, accepted via risk transfer from savvy suppliers or customers. Making sure your business isn't accepting additional and unnecessary risk can save you a lot of money over the long haul, both in legal costs and in insurance coverages.
Do you rely on one or more third-party suppliers to produce certain components used in your products? If you do, a disaster that interrupts your supplier's regular business operations could have a crippling effect on your production abilities. Supply chain insurance is meant to cover losses you incur as a result of an interruption to your supply chain. Such coverage allows you to work confidently with suppliers who face exposures beyond your control.
Insurance is a key component of any business plan. Contact Insurance Plus LLC to learn more about the tools and resources we have to offer your business!
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