Every business —no matter the sector or service— comes with risk. That’s just the name of the game in business.
Although challenges and risks can’t be avoided, they can be mitigated with the proper planning, precautions, and insurance coverage.
Here’s a quick list of today’s biggest insurance risks to business owners, and what you can do to protect against them.
Hurricanes, snowstorms, floods, vandalism, fires and other events that damage your business’ physical property can throw a serious wrench in your company’s ability to operate.
Even if your facilities were not completely destroyed, chances are, you won’t be able to run your business out of there while repairs are underway.
What to do: Your first line of defense against the effects of property damage or theft is insurance coverage. Business owners should make sure their building and its contents — including shelving, displays, inventory and any equipment — are properly insured. Properties should be insured to their full replacement value — not market value — including any recent improvements.
Business Owners should also consider Business Interruption Insurance as a safety net to keep their cash flow going– even when operations come to a temporary halt. Business Interruption Insurance provides coverage for lost revenue and profits arising from uncontrollable interruptions in operations, such as those arising from natural disasters or a building fire.
Even when the best employees are considered, there are risks involved when a company decides to hire. A business should make sure proper coverage is available and in place, whether an employee is performing a labor-intensive task, driving a company vehicle, or interacting with the public.
What to do: While Workers’ Compensation is not mandatory in Texas (with the proper legal filings), business owners should still consider the coverage. Don’t think of it as just a benefit to your employees; Workers’ Compensation is built to protect you, the business owner, in the case of employee injury. Don’t let a large injury suit sink your business when Workers’ Compensation could have prevented or softened the situation.
Beyond Workers’ Compensation, there are other coverages available to business owners to help mitigate their risk as an employer.
Consider looking into Management Liability Insurance and Employment Practices Liability Insurance. This type of coverage protects the owners and managers from suits related to discrimination from potential, current and past employees, as well as third-party claims.
When considering letting employees go, make sure to fully plan and prepare for their departure – this is a good way to avoid legal recourse from layoffs. Consider offering benefits to employees you are planning to let go, such as: severance packages, payment for unused time off, and extended health insurance coverage. Be sure to also consider any pending Workers’ Comp claims that might be affected by layoffs.
Businesses in all industries have seen a huge increase in cybersecurity problems in recent years. Research shows that 42% of small and midsize businesses don’t see cybercrime as a threat to them. Yet 77% of all cybercrime is targeted at small and midsize enterprises.
What to do: Be sure to establish basic security practices & policies for employees, like requiring strong passwords, and establish appropriate internet use guidelines. If you have Wi-Fi at the business, make sure it is secure, encrypted and hidden.
If you accept credit card payment, make sure your payment technology meets legal standards. Work with banks or processors to ensure the most trusted and validated tools are being used. If you don’t take these steps, fraud liability costs could fall to you and your business if a breach occurs.
Even with these preventive measures in place, a breach can still occur. To safeguard a business in the case of cybercrime, owners should look into Cyber Insurance. Cyber Coverage has grown increasingly important to all types of businesses and can help to protect from the costs that come along with a data breach— from client notification, to remediation, payment penalties, & crisis management costs.
MANUFACTURING & TRANSPORT
Manufacturers today face unique risks. Highly specialized machinery can take months, or even years, to replace, and a lot can also go wrong even after production– like during the journey from factory to warehouse to showroom to store.
What to do: Look into Contingent Business Interruption coverage to soften any financial impact if problem does arise – say: a fire at your manufacturer’s factory. Business owners should also consider Inland Marine or Ocean Cargo coverages for products on their way to warehouses and retail stores.
Inland Marine Insurance will come in handy if you ship cargo on land, ship high-value items or high volumes, or have property that constantly moves from place to place.
FINDING THE RIGHT INSURANCE PARTNER
While there’s no substitution for proper precautions and business management, bad things can happen no matter how careful and prepared your business is. It’s worth buying the right coverage to protect the investments and hard work you’ve put into your company.
When looking for insurance coverage for your business, partner with a company that is invested in your businesses’ long-term success and provides the necessary tools & services to protect you.
Don’t go for the lowest cost provider just to save a little in premium today. Choosing the “cheap” route now could leave your business vulnerable when the worst happens. Work with an insurance provider that makes sure you have the proper coverage for your businesses’ unique needs – even if that means paying just a little more.
The right insurance advisory team will be proactive on your behalf and help anticipate and avoid problems areas.
Have questions about your coverage options? Contact our team of industry experts today.
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