As a small business owner, you have a million things on your mind. Only one of those million things is insurance — and insurance is complex. But when you’re the investment you have made in your business, having the right insurance is critical. Running a small business is full of risks and rewards. Protecting yourself requires the right insurance coverage and, if you are like most small business owners, you don’t have the time to spare to research and understand which coverages are right for you. This is why insurance agents are so critically important.
An independent insurance agent can take care of the heavy lifting by identifying the risks facing your small business and what insurance coverages you need to protect it. While an agent can help you pinpoint and protect the risks unique to your business, here are five critical insurance coverages nearly every small business owner needs:
If a fire, burglary, vandalism or weather damages your small business, could you write a check to cover the losses? Property coverage is designed to help protect small businesses’ inventories, equipment, computers, tenant improvements and other important property. According to the Federal Emergency Management Agency (FEMA), roughly 40-60% of small businesses never reopen following a disaster because they are did not have adequate insurance. A catastrophic loss is easy for people to think it will never happen to them, until it does.
In addition to property damage, the above causes of loss (fire, burglary, vandalism, weather, etc.) can also force a business to be shut down for days, weeks or even months. Many bills don’t stop during this time, and many business owners would have a hard time managing through the lost profits during a shutdown. This is where Business Interruption coverage comes in. It can cover lost income from your business being shut down for a variety of reasons.
Imagine someone slips and falls on your small business’ property, and this person presses charges for bodily injuries. You may be required to pay their medical expenses, and lawyer costs alone can surpass tens of thousands of dollars, sometimes even hundreds of thousands. It is not unusual to see the total costs of a General Liability claim reach $2M. General Liability is designed to help cover the expenses that arise from a lawsuit, to help you keep your business running.
Employment Practices Liability Insurance (EPLI)
The U.S. Equal Employment Opportunity Commission (EEOC) reported that it received 7,609 sexual harassment charges in fiscal year 2018, a 13.6% increase from fiscal year 2017, and that retaliation charges accounted for the largest number of charges filed in fiscal year 2018. There are measures your business can take to avoid facing these charges. For example, having an employee handbook to identify expectations for employees and define exactly what constitutes unacceptable behavior can help avoid workplace disputes. However, disputes can still arise and employees can feel wrongfully treated and want to take legal action. This is where Employment Practices Liability Insurance (EPLI) comes in. It can cover losses arising out of employee disputes where harassment, discrimination or retaliation may be involved.
Many small business owners think that their size protects them from cyber attacks, but small businesses have become a common target for hackers. Hackers go after small businesses because they suspect security is not as robust, or employees may not be as wary of these types of schemes. In addition, many small businesses outsource credit card payments to a third party and mistakenly assume that all liability has also been transferred. With proper steps, you can enhance your business’ data security in hopes of avoiding a data breach and the headaches and costs that come along with it. Unfortunately, hackers are unlikely to give up on finding new ways to break into data systems, meaning cyber threats will continue to evolve. A cyber policy can help small businesses recover from a data breach.
As a small business owner, you know that keeping your business growing as you manage your people, property, profits and reputation is more than a nine-to-five job. By speaking with your independent insurance agent, you can find out which coverages are right for your small business.