Nurturing your small business towards success takes resources and a lot of time. This is why you need to look into different types of insurance policies to prevent financial losses and risks that your business might face due to a liability.
You are already under a lot of pressure and with the set of responsibilities you have to juggle on a daily basis you are bound to make some mistakes. It’s alright because after all, we are humans, hence the need for insurance.
A Business at Risk
You recently bought a commercial insurance policy for your business. Since you are new in the field, you are afraid of the unforeseen events that might cause a damage or loss. This insurance policy provides you with all the financial resources that you deem necessary for your business in order to recover from a loss.
Now, you need to plan for the future. You see – when your business grows, the risks associated with the new ventures present a bigger challenge. This is why you need to review your commercial insurance policy time and time again to make sure that it provides good coverage.
For those of who you don’t know, in layman’s terms: commercial insurance policy is an umbrella term that houses several insurance products designed to help businesses recover from loss and protect themselves from liabilities. The most common policies under this category include:
- A Business Owners Policy (BOP)
- Business Property Insurance
- General Liability Insurance
- Commercial Auto Insurance
- Worker’s Compensation
Common Emerging Risks
Let’s assume that you have a workplace that allows employees to access company data from remote locations. An employee forgets to log out from an outside connection, which puts your business at risk. After a few days, there’s an alert that data has been breached and sensitive information is now in the hands of hackers who are demanding a ransom. This is where you need cyber liability insurance to protect yourself from the hackers, as well as the third parties who might come after you when this news is leaked.
You are in the business of producing products that uses a chemical, which is not available in the market. One manufactured batch was contaminated with an unknown substance, which upon interacting with the chemical, resulted in a dangerous product. Part of the batch was sent out and you received numerous complaints of the product harming customers. This is where you need product liability insurance to protect yourself from such claims. Bad word of mouth is the strongest weapon in a customer’s arsenal and has the power to bring your entire business down.
Your factory was destroyed in a storm and all operations had to be stopped. None of the employees were harmed but after taking full stock, it was revealed that the manufacturing machines were damaged beyond repair. This is where you need interruption insurance, as this policy provides you reimbursement for profits based on your business’s monthly performance.
Finally, there’s reputational risk management that allows you to control and direct slander against your company and operations. This is mostly handled through use of social media by responding to clients and addressing their concerns and queries. This is where businesses need to be very careful because a simple hashtag can change the game and give your company a bad name.
Now that you know how a commercial insurance policy works, let’s talk briefly about the 9 business risks that most companies face:
1. Repetitional Damage
Think of your company’s reputation as the bedrock on which the trust of your customers’ rests. When talking about reputational damage, anything or anyone that spreads bad word about your business forces your hands to take action. In such cases, professional liability insurance covers advertising mistakes and reputation damage.
2. Liability for Injuries
This is mostly claimed by employees. There’s a 12% chance that you will have to pay worker’s compensation for incidents such as being injured on company property. This insurance policy covers a number of other things to such as medical benefits.
3. Vehicle Protection
Vehicle protection provides you with safety in incidents such as when your business vehicle is stolen or damaged during an accident.
4. Worker’s Compensation Claims
No matter who is at fault, if the employee is injured on the job, you will have to pay for medical expenses and loss of income.
5. Data Breaches
Cyber security insurance usually provides a safety net of $36,000 to $50,000. You can protect yourself and third-parties at an additional cost, if sensitive information is stolen.
6. Environmental and Pollution Liability
Environment insurance policy provides you coverage when your business is attacked due to the pollutant that might be getting released from your factory during the manufacturing process.
A lawsuit is perhaps the most common risk that businesses face. It’s highly important that you include protection against this in your commercial insurance policy. Lawsuits that are quite frequent are sexual harassment cases.
8. Natural Disasters
Natural disasters such as floods, earthquakes, tornadoes, etc, that cause damage to your business and result in interruption, allows you to file for insurance. This usually comes under property insurance.
9. Business Interruption
Any event that interrupts your business and results in loss, allows you to claim business interruption coverage. You won’t be hit too hard due to the loss of income because your agency will take care of you.
And these are the nine areas that businesses are vulnerable too. Luckily, majority of the coverage mentioned above are available under commercial insurance policy. Looking for an insurance agency that will help you find out your needs?
First, asses your annual income and then you will able to find out how much coverage you can afford. If you are looking for a qualified insurance agent who holds years of experience in this field, then visit Pawson. The company provides several types of commercial insurance policies. To know more about their policies, contact them at 203-481-8898.
Digital Marketing Director
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Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services. Statements on this website as to policies and coverages provide general information only. This information is not an offer to sell insurance.