Business Insurance Assessment: Does Your Business Have Adequate Coverage?

Business Insurance Assessment: Does Your Business Have Adequate Coverage?

People who venture into starting their own business know that while it’s a rewarding endeavor, it’s also risky and challenging. Accidents and natural disasters can happen when you least expect it, and a lawsuit, accident, or damage to property can cripple operations or put you out of business altogether. 

No business is exempt from risk, regardless of company size or industry.  Startup owners in particular need to safeguard their finances to ensure that their business will be protected in the face of an unfortunate scenario. 

Commercial insurance should be seen as a wise investment, not just an additional expense. It guarantees business continuity when an accident happens, whether it’s a fire, a slip and fall, or an employee injury that takes place on your property. Depending on your business’s specific industry and requirements, there are a number of different policies to consider. It can be complex and time-consuming to figure out where to start. Here are four key things to keep in mind at every stage when it comes to insuring your business: 

The Basics

General Liability insurance  protects your business against financial losses due to claims associated with personal injury and/or damage to property. It can be purchased on its own or in a package called a Business Owners Policy (BOP), which combines General Liability with Commercial Property insurance.

Additionally, you should look at Commercial Property insurance. Natural disasters, fire or theft can take a toll on your finances, which is why it’s crucial to carry this type of insurance. It protects your business’ physical assets such as office equipment and other tools.

Insurance for Growth

In general, starting and running a business entails a considerable amount of money, and, unless you can foot the bill independently, you need investors to keep going.

One way to attract investors is to carry adequate insurance coverage. Why? Investors want to reduce the risks and potential losses associated with investing in a business and having insurance shows that your business is protected against these uncertainties. Considering purchasing:

  • Directors and Officers insurance: As you grow, your business will hire officers, executives, and directors. These new members of your team will most likely require that you purchase D&O insurance, which is designed to protect higher-management employees from claims associated with wrongful acts.  
  • Professional Liability or Errors & Omissions Insurance: This type of insurance protects you against claims associated with negligence or mistakes that resulted in a financial loss for a client, which is especially beneficial for businesses that provide consulting services.

Insurance Is Important for Business Partnerships 

Part of your growth plan likely includes striking new strategic partnerships. A portion of the success of a business, regardless of size or nature, can be attributed to its relationship with third parties such as referral partners, vendors, suppliers, contractors, and wholesalers. By carrying the right coverage, your partners will see that you can be trusted and are reliable to do business with. Since acquiring a larger network and client base means handling more and more customer information and data, you should consider Cyber Liability insurance

A single data breach could mean substantial financial losses. With Cyber insurance, your business is protected against claims that are related to identity theft, breaches, as well as other digital risks, and it also covers the fines, penalties, and other expenses that come with a cyber-related claim.

Employee Safety is And Should Be a Priority 

Your team plays a  critical role in the success of your business, so it’s only right to ensure their safety at all times. Make sure to have a comprehensive set of safety guidelines in place in your when you create your employee handbook that adheres to your state’s rules and regulations for maintaining a safe work environment. If one of your employees slips and sustains an injury, the medical fees and other expenses associated with the incident can pose a risk to your business.

In most states,  Workers Compensation insurance is a legal requirement,  and it covers the medical bills and rehabilitation expenses of an employee who sustains injuries while working. In addition, it also covers the salary for that employee when they need time to recover before returning to work.

Your business’s insurance needs will change as your business grows, and it’s imperative to continually assess your risks and exposures. As your business expands, you’ll realize that the risks that come with it may be different and more complex than what you’ve handled in the first few months or years of operation. Stay on top of your insurance policies and make sure that the coverage is enough to meet the requirements of a growing business because it’s best to be prepared at all times to avoid any inconvenience later on.

Don’t let all your money and hard work go to waste because you didn’t have adequate coverage to protect your business against financial losses. Assess and understand the risks involved in running a business, and continuously keep insurance policies updated. By carrying the right insurance, you can focus more on other important business matters. It also gives you peace of mind, knowing that you have something to rely on in case of any unfortunate incident.

Article By: Emily Lazration, CoverWallet

Emily is the Content Marketing Specialist at CoverWallet, a tech company that makes it easy for businesses to understand, buy and manage commercial insurance online.

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