How Business Insurance Protects Your Company — and You

How Business Insurance Protects Your Company — and You

Intensifying weather events have caused many business leaders to revisit their insurance policies to make sure they have the right types and levels of coverage to protect their companies in the face of unforeseen calamities. Those calamities are not limited to extreme weather conditions; businesses and their leaders also face financial risks associated with potential lawsuits, employee injuries, car accidents, cyberattacks and other adverse situations.

For un- or underinsured companies, the damage can be severe. A sizable lawsuit can take down a small- to medium-sized business, and result in steep financial losses for the owner or partners. Likewise, the destruction of buildings, equipment and other physical assets due to fire, smoke or vandalism can cause business disruptions in addition to financial loss.

Business insurance offers protection for your company, your employees, your livelihood and your personal finances. Following are eight types of insurance every business leader should know about.

General liability insurance

Commercial general liability insurance provides coverage for circumstances in which a person or their property is harmed by your business. Coverage may include injuries at your place of business, damage to personal property, and/or reputational damage or physical harm caused by the product(s) or service(s) you make or market. (Product liability is sometimes covered by a separate policy.)

These examples illustrate instances where general liability insurance may help:

• Accidental injuries – A customer files a complaint after slipping and falling on ice at a retail shop’s entryway.
• Personal property damage – A plumber inadvertently knocks a customer’s antique vase to the ground with their toolbox, leaving it in pieces.
• Reputational damage – Individuals sue for slander or libel, claiming the defendant made false, malicious statements about them. Businesses may sue for copyright infringement, privacy violations or product disparagement.
• Harm caused by a product or service – Customers sue a deli after contracting food poisoning from meats contaminated with listeria, or a customer sues for bodily injury incurred by a defective bicycle they purchased.

Business auto insurance

Just as you insure your personal vehicle(s), you must insure cars, trucks, vans and other vehicles used by your company when carrying out business. A business auto policy may include vehicles your company owns or leases, as well as employee-owned vehicles used for business purposes. (Personal auto policies typically don’t cover accidents that occur when the vehicle owner is driving for a work purpose.)

Directors and officers (D&O) insurance

D&O insurance protects the directors and officers of for-profit or nonprofit organizations from personal losses if they are sued for a matter related to their position. It can also reimburse some legal fees and other costs incurred by the organization in its defense of the individual.

A D&O policy typically covers legal fees, settlements and financial losses for allegations such as regulatory noncompliance, breaches of fiduciary duty or reporting errors. Fraud and other criminal activity, and lawsuits between individuals within the same organization, are usually not covered.

Errors and omissions (E&O) insurance

Alleged malpractice, errors or negligence related to the professional services a company provides to a client are covered by E&O insurance. Accountants, real estate agents, technology experts, and other professional service providers and consultants turn to their E&O coverage when a customer accuses them of poor or harmful advice.

Commercial property insurance

Fire, smoke, storms, theft and vandalism can damage or destroy office buildings, stores, restaurants and other physical assets. Commercial property insurance offers financial support to help businesses repair or replace damaged buildings and equipment.

Unfortunately, commercial property insurance rates have been rising, particularly in high-risk areas, as the frequency and intensity of weather events grow. Flood coverage adds to the expense, because most flood damage isn’t covered by standard property policies. Yet, it is precisely these increased risks that make property insurance essential for companies with physical assets.

Workers’ compensation insurance

Workers’ compensation provides a variety of benefits to employees harmed by a work-related accident or illness. The government mandates that companies with employees provide workers’ comp benefits, but the specific benefit provisions vary from state to state. Policies typically cover medical costs, lost wages, disability pay and more.

Cyber coverage

Data breaches and other cyberattacks have become commonplace among businesses large and small. Cyber insurance policies can help mitigate financial losses associated with such incidents.

Policies typically cover both first- and third-party losses:

• First-party losses are costs your company incurs to get your business back up and running following a cyber event — costs for obtaining advice and support, identifying the source and scope of the attack, restoring systems, recovering data, notifying victims of privacy breaches, etc.
• Third-party losses are those experienced by a client, supplier or other external entity when your company falls victim to a cyberattack — costs related to confidential information theft, for example, or the transmission of computer viruses.

Key person life

What would the financial implications to your business be if a key person in your organization were to unexpectedly die? Key person life insurance provides a death benefit to cover costs related to replacing them or buying out their share of the business from their heirs. Your accountant or financial adviser can help you determine which individuals are critical to your company’s financial success and how much coverage is appropriate.

Your company’s specific insurance needs

Finding the right insurance for your business requires thoughtful evaluation of your industry and circumstances. For example:

• If you own a restaurant, address considerations such as customer injury, including slips and falls, and potential foodborne illnesses.
• If you offer professional accounting or bookkeeping services, weigh in the potential for claims of errors, negligence or poor performance.
• If you produce and market products, assess the potential risk for customer harm.

More general considerations, such as whether you have employees and own buildings or equipment, should be taken into account as well. A reliable, licensed insurance agent can help you sort through the relevant factors and secure coverage that makes sense for your business and your bottom line. You can start the conversation now with a Dollar Bank Insurance Agency representative through an online request or by calling 855-482-7951.