As our world becomes more complicated, the risks of doing business also multiply. Many new business owners obtain general liability insurance and think that this will be sufficient to protect their business and their assets. Many of these business owners are focused primarily on growing their businesses but often neglect the liability that comes with this growth.
With the increasing number of lawsuits and as new threats emerge; general liability insurance may not be enough to protect businesses against a financial catastrophe. When working with small and medium sized businesses, I often find that there are caps in coverage or simply not enough coverage. There are also many threats which are not covered at all by general liability insurance. With this in mind, I have decided to list out the insurances that many business owners should have.
- General liability insurance:Every business, even home based businesses, should have Commercial general liability. This policy covers a business against personal injury, bodily injury, and property damage caused by the business’ products or services. It also covers injuries that occur on the business’ premises.
- Home-based businesses:Many homeowner policies do not provide coverage for business property that is kept inside the home. The ones that do provide coverage are usually pretty limited. Therefore, home-based businesses are usually advised to obtain a home-based business policy to cover equipment and inventory that I stored in the home.
- Property insurance:Property insurance is vital for any business that owns a building, furniture, equipment, and/or inventory. This insurance policy will cover the business against fires, vandalism, theft, or storms. Keep in mind that most property insurance policies do not cover mass destruction events such as earthquakes or floods.
- Renters insurance:Businesses that rent their property should consider obtaining renters insurance. This policy helps cover the business against damages to the business property, personal injuries occurring within the property, or the contents of the property.
- Business interruption insurance:Catastrophic events can sometimes occur resulting in disruption of the business’s operations and ultimately leading to a loss of income to the business. Business interruption insurance compensates businesses when such events occur. This insurance policy is especially important to businesses that operate out of a physical location such as a store.
- Disability Overhead insurance:Disability overhead insurance should be considered for businesses that require the owner to be present in order to generate income. For example, a doctor generally needs to be present at a medical office in order for that business to make money. Disability Overhead insurance compensates the business in the event the owner becomes disabled thereby allowing that business to continue paying overhead expenses.
- Commercial auto insurance:Company vehicles that carry employees, products, or equipment should be insured to protect the company against liability should a collision occur. In cases when employees drive their own vehicles, the business should consider obtaining non-owned auto liability. This will help protect the business should the employee not have adequate insurance coverage.
- Professional liability insurance/Errors and Omissions:Professional liability insurance provides coverage to the business against negligence claims due to damages caused by improperly providing professional services or failure to perform. This insurance is essential for professional firms such as accountants, notaries, real estate agents, insurance agents, doctors, and lawyers.
- Buy-sell Disability and Life insurance:Many businesses involving multiple partners arrange buy-sell agreements in order to govern situations in which one partner is forced to leave the business. A buy-sell disability insurance policy can provide funds allowing for the insured’s share of ownership to be purchased should he or she become totally disabled. In a similar fashion, a buy-sell life insurance policy can provide funds in the event the partner passes away.
- Directors and Officers Insurance:This insurance policy protects individuals from personal losses in the event that they are sued while serving as an officer or on a board of directors. For example, if a director finds himself facing a lawsuit as a direct result of his actions while at work, this insurance policy can cover the loss caused by the legal situation.
- Employment practices liability insurance:As the sex-based harassment allegations continue to rise, EPLI insurance is becoming more and more popular. This insurance provides coverage to the business in the event there is a claim made by an employee. This includes claims alleging harassment, discrimination, and wrongful termination.
- Workers Compensation:In Georgia, businesses must obtain workers compensation insurance if they employee three or more people in Georgia. These can be either part time or full time employees. Workers compensation provides medical benefits and wage replacement to employees whom are injured on the job.
- Group plans for employees (Life, health, disability, etc.): While not directly protecting the business itself, retaining employees can be a big problem for businesses with a high turnover rate. Providing benefits such as life or health insurance can decrease turnover and ultimately save the business the cost of training and rehiring.
- Commercial crime insurance:Commercial property insurances usually do not cover crime related losses. As a result, many businesses obtain commercial crime insurance which provides coverage in the event of computer fraud, robbery, forgery, theft, and employee dishonesty.
- Excess casualty Insurance:Excess casualty insurance provides coverage in case of catastrophic events such as damage caused by hurricanes. Such events can result in damages that exceed normal policy limits. Having a good excess casualty insurance policy can help pay for excess costs.
- Product liability insurance:Any business that sells products on the general market should strongly consider obtaining product liability insurance. This insurance policy provides coverage in the event the business gets sued due to damages that were caused by one of its products.
- Data Breach:Data breach policies should be highly considered by any company handling sensitive data such as medical offices. This policy covers against losses caused by either electronic or paper file data breaches.
- Commercial flood insurance:Most business property insurance policies do not cover flood related damages. Therefore, it is important to obtain coverage if the business operates at a location prone to occasional floods.
- Terrorism insurance:As the name implies, terrorism insurance provides coverage to the business in the event of damages caused by acts of terrorism.
Some of the policies listed above may be bundled together. However, as a business owner, it is important to evaluate the risks of the business and make sure that the business is covered against all forms of damage. Some businesses may even require additional insurance coverage that is not listed above such as pollution liability and environmental, transportation of hazardous materials liability insurance, and underground storage tank. Ultimately, when something goes wrong with the business, it falls on the owner to shoulder the burden of responsibility. Making sure there is adequate coverage will help ease the load.