Will Your Business Property Insurance and General Liability Insurance cover all of Your risks?
If you are a business owner I wanted to alert you to a risk you may be facing but may not discover until it’s too late.
When it comes to business insurance, many business owners make one of two mistakes: 1) They believe property and general liability insurance will cover all the risks they face; or 2) they’re aware of other dangers but don’t think they can be protected against with insurance.
In most cases, they’re wrong on either count.
Scores of additional hazards may threaten a business, while almost every conceivable risk can be protected with insurance — if you know where to get it.
The principle categories of business insurance are:
- General liability — for accidents and negligence claims that cause bodily injury or property damage.
- Product liability — for defective or unsafe products you make or sell.
- Professional liability, sometimes known as errors and omissions — for claims alleging malpractice or mistakes.
- Business Property Insurance — for damage to your buildings caused by a wide range of hazards.
- Employee benefits including health, life and disability.
- Business Auto Insurance and Equipment Insurance.
The trouble is that the way insurers define these groups, and the range of perils they cover, varies hugely.
For instance, some commercial property insurance protects against loss of income or business interruption, some don’t. Others may exclude particular perils — flood damage being one of the most common.
And certain policies will only protect you against storm or quake damage if you provide evidence of structural reinforcement.
Some vehicle insurance policies cover employee usage of their own autos on company business. Others don’t.
Some insurance coverage can be combined into a single plan called a Business Owners Policy (BOP) but, again, this doesn’t cover everything.
There are many types of additional protection you can secure, either as a separate policy or as an endorsement to an existing one — for example Special Event Liability Insurance, Pollution Liability Insurance, loss of key personnel, Cyber Liability Insurance / Data Breach Insurance, and risks specific to your particular type of business.
The other factor where owners sometimes fall down is in estimating the amount of coverage they need.
It’s not uncommon to read about incidents where insurance policy limits turned out to be totally inadequate for meeting the cost of lawsuits. Business owners simply thought they were getting a great bargain when they bought the policies at cheap prices.
Believe me, I’m not trying to scare you. I just wanted to get you thinking about the various risks your business faces today and in the future.
For instance, your firm may have changed significantly since you started out. Some risks fade, new ones arise.
It would probably be a good idea to take time each year to review your existing coverage with your insurance agent. This meeting is just as important as your annual meeting with your accountant or attorney and is to make sure you’re properly protected.