5 Tips to Keep Your Business Safe
By Charong Chow
Business insurance may be at the bottom of your to-do list, but when it comes to growing a successful business, you really need the safety net of quality professional coverage that's specific for your industry.
Stumbling Blocks of Old School Insurance
What makes business owners reluctant to purchase insurance is the outdated system of acquiring coverage. It involves a lot of paperwork, old school insurance agents who don't care to make the process understandable, and it's time consuming. In addition, many small business owners assume that the small scope of their business is proportional to the chance of an employee getting injured on the job, a criminal hacking their online payments system, an unsatisfied client suing them for poor counsel, and other similar situations. So, they don't want to waste their time or money on insurance.
However, the reality of the business world today is that any sized company needs to be covered against at least the most frequently occurring liabilities. The following five types of insurance will get you started on planning out your company's safety.
Since you're reading this article at IBN, you're probably interested in cyber safety, and one of the ways to protect your business is to purchase cyber insurance. Even if your business doesn't depend too much on technology, you can hardly avoid using the Internet for work. And if you think your company is too small a bite for hackers, think again. One incident of cyber attack could mean the end of a small company, because in many cases it doesn't have the resources to recover after money or data loss. Cyber insurance covers potential victims notification costs, civil damages, and it pays for victim's insurance policies and computer forensics consultants who, apart from other services, work on preventing further damage.
Most business owners need general liability insurance, especially if in the course of doing business you interact with other people - customers, clients, your employees, etc. Any of those people could sue you for some type of injury or negligence. Once a third party takes legal action against a company, your defense could be so costly that it could put a small company out of business, unless you have general liability insurance which can help cover some of these expenses.
Aside from general liability, professional liability is another type of must-have insurance for businesses that offer some sort of professional services to clients. It covers what general liability insurance usually doesn't, and that's protection against civil lawsuits for errors and omissions on the part of the experts providing the service. Getting sued for bad advice or service that somehow resulted in (usually material) damages to a client happens at such a rate that it definitely justifies having insurance.
D&O stands for directors and officers of a company. When they are sued for breach of duty, contractual disputes, negligence, failed promises, or some other form of errors and omissions, they may have made managing the company, it can damage both the company and its leaders. It can also jeopardize their personal property. However, if the company has D&O insurance, it will cover the costs of defense. Though many business owners aren't familiar with D&O insurance or they don't feel they really need it, it's the best way to make company leaders feel safe and let them focus on what they do best.
When an employee gets injured on the job and sues the company, the lawsuit can really drain out the company's resources. That's why obtaining workers' compensation insurance is very important if you want to protect your business from this type of liability. The insurance covers medical expenses of the injured who in turn agrees not to sue the company. Some business owners don't feel the need to acquire worker's comp because they provide a relatively safe work environment, but many of them live to regret that decision.
There are many other types of insurance that business owners should consider purchasing depending on their company's profile, but these five are relevant to most types of businesses. Of course, there's still the issue of insurance being too complex to comprehend, but modern insurance agents and digital platforms like Embroker are working hard on bringing insurance up to date by simplifying the process of acquiring it. So you do have some viable options of keeping your business safe, and the sooner you start insuring your business, the safer.