One of the biggest mistakes owners of growing businesses make is not keeping up their insurance coverage to account for the expanding assets and potential liabilities.
Let's say you started your business 10 years ago with just a small space and computer desk. Today, you have an office full of employees and equipment. If you still have the same insurance coverage as you did a decade ago, or even three years ago, the chances are high that you are underinsured.
To make sure you have all of your assets covered, you should review your business insurance program annually. Circumstances change, and without a yearly review, you could be faced with substantial expenses if you suffer a loss.
It's common for small businesses to start out with basic insurances, such as commercial property and general liability policies. However, as they grow, most owners need other types of insurance, such as:
• Excess liability or umbrella - This covers claims exceeding your standard policy's limits.
• Workers' compensation - After your business hires its first employee, this type of insurance will be required in most states to provide payments for an employee's lost wages and medical expenses following a workplace injury.
• Professional liability - This form of insurance covers your service-provided mistakes, and usually your attorney fees.
• Auto, hired and non-owned - This protects your business should an employee cause a vehicle accident in their personal or rented auto.
• Commercial auto - This provides coverage not under personal auto policies, such as to your business and for employees unloading and loading.
• Employment practices liability - Coverage for HR issues, such as those related to termination, harassment and discrimination laws.
• Directors and officers liability - Financial protection for directors and officers should they be sued for wrongful acts stemming from performance of their duties.
• Employee benefits liability - This insurance covers liability issues from an omission or error in the administration of an employee's benefits that results in the employee incurring a cost, such as a terminated worker losing benefits after not being provided with COBRA information.
Depending on your business, many of these coverages may be essential to adequately protect your firm. An annual insurance review is an ideal time to discuss your needs with us.
Ensure the following elements are considered as you begin the review:
• Revenue - More business is good, but it also means a greater potential for liability. Have your annual sales changed?
• Property - Have you added equipment, computers and such that would create a need to increase your commercial property policy's limits?
• Location - Your business owner's or general liability policy could be affected if you've added, closed or moved locations.
• Travel - A hired and non-owned auto policy may be needed if your employees are frequently driving rented vehicles.
• Employees - Have you had an increase in your workforce, turnover rate, or use of contractors? Consider employment practices liability insurance for high turnover rates. The more employees you add, the more you'll pay for your workers' comp coverage.
• Services - Are you offering additional services? For certain types of work, you may need additional endorsements to your general liability policy.
• Customers - Are you serving new clients or industries? This may cause problems with your professional liability policy if you're servicing high concentrations of high-risk clients/industries.
The answers for each of the above won't remain the same over a business's life, and that's why insurance isn't a one-size-fits-all, unchangeable product.
Annually review your business for exposures and insurance needs. Insurance may not cover everything, but it can certainly mitigate your risks.
Call your agent today to start your annual business insurance review or if you'd like a "second opinion", call me at 516-779-4281. I'd be happy to offer suggestions on how to close your "coverage gaps" while getting the most out of your premium outlay.