New business owners want to keep operating costs low. They may not be exposed to a lot of risk at launch and will purchase only the required insurance like workers’ compensation and Commercial General Liability coverage. Many business owners neglect to review their insurance policies as they grow in size, profit, and liability.
The Reasons Your Basic Coverage May Not Be Enough
Four types of claims are typically covered by Commercial General Liability Policies.
Infliction to the body
Property damage or loss
personal injury, such libel and slander
Commercial liability insurance can be quite affordable, but the costs of defending a claim is not. General Liability is the answer. General Liability will pay for all damages, legal fees, and settlement costs up to the policy limits. In a Business Owner’s Policy, (BOP), general liability is often included with property coverage.
BOPs are specifically designed for low-risk small and medium-sized businesses. It must include tangible assets such as computers and office furniture. In some cases, it may even cover the loss of business income.
Talk to your broker about updating your coverage
Business owners should review their policies with their broker regularly, especially when there is significant growth or change. This will ensure that they have the right amount protection. It is important to review the insurance requirements of business owners as the business environment becomes more complex.
Protect All Bases
Many businesses have taken the necessary steps to insure against injury and property loss claims, which are the traditional forms of commercial insurance coverage. However, they may not have considered protecting themselves against negligence claims. E&O insurance (also known as Professional Liability insurance) protects individuals and organizations from professional negligence claims. It covers a wide range of professional services.
Vendor insurance is an optional coverage that businesses who deal with international vendors should consider. Some foreign companies won’t do business with any company outside their country if they don’t have vendor insurance.
The Best Ways to Upgrade Your Small Business Insurance
Business owners have the option to increase their protection by adding supplemental insurance or increasing their Commercial General Liability coverage. There are many types of supplemental insurance:
Auto/fleet Insurance: Covers injury, damage, or theft to company-owned vehicles. It also covers employees who may be involved in an accident while driving personal cars on company business.
Business interruption insurance: Covers the loss of normal business income if it is deemed necessary. It reimburses companies for income lost until they can resume full operations.
Third Party Fidelity/employee disonesty insurance: This covers the costs of any losses that an employee causes to the business owner, or to one of its clients.
Umbrella insurance: Offers extra coverage if a claim exceeds the limits an underlying insurance policy.
Don’t add too much supplemental or umbrella coverage. The costs could quickly mount. It is important for business owners to spend time looking into ways to lower their premiums. This can often be accomplished with just a few steps: keeping duplicate records off-site, installing an alarm system, and researching the number claims against companies in the same industry. The business owner should provide this information to their broker if there are not many lawsuits.
There will be different risks and coverage requirements. When it comes to Commercial Liability insurance policies, there is no one-size fits all. Business owners should make it a point to discuss their coverage with their brokers. Usually, this is when the policy expires.