Success Digest

Does Your Small Business Have Enough Insurance? By Melinda F. Emerson

I am concerned that small business owners do not have adequate liability insurance for their businesses, and I wanted to provide information so that you will know what you need to be protected. I reached out to a few insurance experts to help me explain your options and what is needed in a typical small business.

So what triggers the need for business insurance?  When you are renting a property, a landlord will often require a general liability policy as part of your lease agreement. If you are doing business with a Fortune 500 company, you will often be required to have general liability insurance with at least $1,000,000 in coverage.  If you are consulting or providing expert advice you could be required to have errors and omission insurance. But too many small business owners overlook key insurance needs.
Alice Niles, President of A. P. Orleans Risk Management said small business owners need to make sure they are properly insured. “You should manage your risk, you should not let it manage you. It’s what you don’t know that always hurts you”, said Ms. Niles.
Hiscox insurance expert Kevin Kerridge said, “You actually don’t have to make a mistake to have your company sued, the insurance could cover the cost to defend your business reputation.”
Edmund C. Nelson of State Farm Insurance, suggests that you check with your existing insurance agent about what is available first, and if they are unable to cover you for certain specialty insurance needs, they can provide a referral to another provider.  The good news is that business insurance is not terribly expensive. There are a host of internet providers that provide business insurance at affordable prices.  Here is a list of the types of insurance you may want to consider for your business

• General Liability Insurance: This insurance covers products, completed operations, and premises operations. So if you are a restaurant and someone gets food poisoning you are covered. Or, if you build a new floor in a home, and the floor warps because of the way it was installed, you are covered. If you rent a facility and someone falls and gets hurt, you are covered.

• Errors and Omissions Insurance: This professional liability insurance covers anyone who presents themself as an expert and provides advice or consulting services. If a project goes poorly and the client sues, you will be covered for your legal fees and defense costs. For an average $1,200 per year cost, you could have $1,000,000 worth of professional liability coverage or more.

• Auto insurance: Commercial auto insurance is needed if the vehicles are owned by your company and operated by employees or yourself to do business. You should also consider adding, a hired and non-owned automobile liability rider. This is in case, you or an employee rents or borrows a car to do business during work hours, and someone is hurt by the vehicle, you will be covered.

• Worker’s compensation insurance: It is the law; you must have this insurance if you have employees. The pricing is regulated by the state you operate in.  If you do not collect certificates of insurance from all 1099 or subcontractors, you will be liable for them on your insurance policy. Ms. Hines added, “Worker’s compensation policies are subject to audit. If you can’t prove your subs have insurance, you will have to pay for them under your worker’s compensation policy”.

• Employment Practices Liability Insurance: This extra insurance covers incidents like sexual harassment, discrimination, hostile workplace claims, and unfair employment practices.

• Medical malpractice insurance: If what you do is FDA regulated, you could be subject to medical malpractice insurance.

• Commercial Excess Liability insurance: This is extra insurance if you exceed the limits on your general liability policy or commercial auto policy. It typically costs $300 per year for $1,000,000 more coverage.

• Cyber Theft of your Business Bank Account: Over $1 billion a year is stolen from business bank accounts, according to Bloomberg News. Seventy-three percent are stolen via fraud attacks. There’s a new product on the market that will cover your commercial business account against cyber theft or fraudulent wire transfers.  Under the current banking laws, FDIC insurance doesn’t cover small business bank fraud, it only covers you against your bank becoming insolvent. The Commercial Deposit Insurance Agency is providing this insurance and will cover up to $50,000 for a premium of $175.00 per year.

What is piece of mind worth to you in your business? Call an insurance provider today and find out how much coverage you have or need. Start investigating what it will take to protect your business, before it’s too late.