By Catherine Powell
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| Image courtesy of Creative Commons |
If you own a business, you realize there’s
a certain amount of risk that goes with the territory. The bigger your business is, the bigger the
risks. That’s because the bigger your
business gets, the more chances there are for things to go wrong. Employees can get injured on the job,
customers can sue you, business partners can pass away and data can be
stolen. However, even if you run a small
1-man business from your home, you’re not immune to business liability issues
that could quickly put you out of business.
Whether your business is a sole proprietorship with only one employee,
or it is a going concern with 100, today’s blog will show you how to determine
how much liability insurance your business needs.
1. Does your company own any vehicles? – If it does,
you’ll need to look into acquiring commercial auto insurance. This is regardless of whether you are the only
one driving the company car, or your employees are behind the wheel. Should the company car be in an accident, not
only will the driver be liable, so will the business. Speaking of which, in addition to commercial
auto insurance, you should also speak with your insurance agent about adding an
automobile liability rider that will protect your firm should one of your
employees injure someone while borrowing the company car to run an errand.
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2. Worker’s Comp – Unless you’re the only employee of your
firm, you might be required by law to carry worker’s compensation. That being
said, specific employer coverage varies from industry to industry, as well as
the number of employees. Construction companies with even a
single employee are required to provide worker’s comp, while non-construction industries
of four or more employees, including the business owners are required to
provide worker’s comp. Even out of state employers with employees engaged in
work in the State of Florida are required to obtain a Florida Worker’s
Compensation insurance policy with an approved insurance carrier.
3. Nobody’s Perfect – No matter how smart or
well-trained an employee or business owner is, sometimes we all make
mistakes. To err is human, to forgive is
not always the case. Especially when
filing a lawsuit is so easy. In the
insurance industry, there are several forms of coverage to protect your
business should something untoward happen to a client. The first is called Errors and Omissions
Insurance. This protects anyone who gets
paid for providing expert advice. If you’re
a business consultant, a financial planner, or an accountant, you should
protect yourself and your business by acquiring E&O insurance. The reason
experts need this kind of coverage is because of the litigious nature of
society. Even if you’re not to blame, should
a client take you to court, you’ll be required to hire an attorney to mount your
defense. There will also be other legal
fees that will have to be paid to the court.
When you weigh the minimal cost of a $1,000,000 E&O policy versus
the amount of money you would have to shell out were a client to bring suit,
it’s obvious this is likely the path of least resistance.
4. General Liability – This is another way to cover
your business for anything untoward that happens regarding your business’
operations. If someone slips and falls
in your office (or home office), you will be covered. If you run a restaurant and a patron comes
down with food poisoning, you’re covered.
Just as with worker’s comp insurance, the general liability needs of one
business will be different from those of another.
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5. Cyber Insurance – If your business handles credit cards
or stores sensitive client data on your computers, you need to consider cyber
liability insurance coverage (CLIC).
Hacking, ransomware and other cyber-security breaches are at an all time
high. In 2015, Lloyds of London
estimated that cyber-attacks cost businesses $400 billion globally. By
2019, it’s estimated these business losses will top $2 trillion. While most business owners realize their
technology is vulnerable to being hacked, what they don’t understand is the
consequences to their businesses should a breach occur. Should your system be breached and data be
stolen, your E&O policy will not cover the costs for such things as the
inevitable loss of income from network downtime. Neither will it compensate you
for any forensic investigation required to ascertain the damage done, nor the
costs necessary to plug the breach. On
top of that, you could be required by law to notify affected customers, as well
as monitoring the credit of any client’s whose financial data was
compromised.
6. Employment Practices Liability Insurance– Any time you
have to deal with employees, you also have to deal with employee
grievances. Should you or anyone in your
business ever be accused of sexual harassment, racial discrimination, hostile
workplace claims or unfair employment practices of any kind, you could be
called on to defend yourself in court.
Even if the accusations prove groundless, the cost to defend yourself
could set your business back enough to financially damage or destroy it. Once you start adding employees, it’s better
to add this kind of coverage rather than risk having all your hard work go up
in flames over an employee dispute.
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| Image courtesy of Max Pixel |
8. Key Person Insurance – While not
strictly classified under the umbrella of liability insurance, if you or other
members of your staff could scuttle your business were they to die, you need to
ask your agent about key person insurance.
Basically a life insurance policy that’s tied to those in your business
who would be nearly irreplaceable were they to pass on, this kind of coverage
is designed to help the business stay afloat until a replacement can be
found. Like traditional life insurance,
the policies payout a fixed sum from $100,000 to $1,000,000 in the event of
death. Unlike traditional life policies,
the payout is not to the family of the employee, but to the employer. The trick to getting the right amount of
coverage is to determine how much your business would need to survive were this
key cog in the corporate machine be knocked out.
Just as you take great pains to balance
the needs of your staff and the needs of your business, having the right kinds
of liability coverage can allow you, the business owner, to continue to grow
your business without losing any sleep over its well-being.
Catherine Powell is owner of A Plus All
Florida Insurance in Orange Park, Florida.
To find out how to protect your business, check out
her website at http://liabilityinsuranceorangeparkfl.com/
It takes years to build a business and only a few moments to bring one down, especially once the lawyers start getting involved.
ReplyDeleteIf you don't have liability insurance for your business, you best look into it. One small mistake can end your business, just because you did not invest in its protection.
ReplyDelete