Some owners assume their business owners policy protects against every risk. That’s not the case. You might have a liability that creates a significant coverage gap without even knowing it.
Take some time to review this list of frequently overlooked business risk areas and possible solutions. (And if you have a liability question that doesn’t appear on the list, just reach out!)
RISK AREA:
INSURANCE SOLUTION:
Your commercial property is located in an area that has flash rains, snow melts, thunderstorms, floods, mudslides or relies on a sewer system.
Commercial Property
Commercial property (and business owners) policies do not cover floods. Most flooding occurs in areas that are not rated as a flood zone. A flash rain or snowmelt can cause a basement to flood and cost thousands to remediate. An inch of water can cause over $25,000 in damage. Think of the business equipment and storage in your basement or first floor.
Your commercial property has plumbing or relies on a sewer system.
Sewer backup insurance
Sewage backup could force you to close for a while, resulting in lost income (business interruption). Sewer backup insurance is different from flood insurance; we can explain the details if you like.
Your commercial property is near a fault line or could experience earthquakes or earth movement.
Earthquake insurance
Earthquakes are not covered events on a commercial property policy. If your business is damaged due to earth movement, it may need substantial repair, especially if it’s not an earthquake-resistant design. You can buy a separate earthquake policy or add it to your property coverage (in some areas).
You’re unsure if the commercial property is insured for the market value or replacement value.
Evaluate property limits
The market value of your building is not the same as the replacement value. Market value is what someone will pay for your property on the open market. Replacement value is what it costs to rebuild your property. Replacement value can exceed the market value by tens of thousands of dollars or more. Insure for the proper amounts and reevaluate every few years to stay current with market costs (inflation, weather events, supply chain shortages and labor costs).
You’re interested in rebuilding your commercial with energy-efficient materials after a property loss.
Green materials endorsement
You’re interested in rebuilding your commercial with energy-efficient materials after a property loss.
Green materials endorsement
You lease your commercial space and make improvements to the property.
Improvements and betterments endorsement
If you rent your commercial space and install permanent improvements (like a custom bar, high-end flooring, chandeliers, built-ins, etc.), improvements and betterments can protect your investment. It helps reimburse the cost of permanent additions you made to the leased commercial property after a covered event.
Your business operations involve clients, vendors, products or a brick-and-mortar business location.
Increase commercial general liability or business owners limits
You own a commercial property.
Building ordinance or law endorsement
If local or other laws require you to rebuild your entire structure to code (even the undamaged parts that property insurance won’t cover), ordinance or law will respond.
You display art or a valuable collection on-site at your business location.
Valuables and collectors or fine arts insurance
Collectors and their collections require distinctive insurance. An agreed value is an agreed-upon price for replacement. The appraised value is dependent on an appraiser’s valuation of the collection item.
You coach sports or work with youth, elders or disabled individuals.
Molestation and abuse insurance
If you coach sports, lead youth groups or work with elders or disabled individuals, you could be at risk for abuse allegations. Most general liability insurance specifically excludes abuse and molestation coverage.
You hire or work with employees, volunteers or contractors.
Employment practices liability insurance (EPLI)
Workers’ compensation covers you for injuries that happen on the job, but it doesn’t cover discrimination, wrongful termination, harassment, wrongful failure to employ, failure to promote or other human rights complaints. (It even responds to complaints involving artificial intelligence programs used for hiring and promotion decisions.) EPLI helps with legal defense and settlement costs if an employee, contractor, volunteer or potential employee sues you.
You’re a member of a board.
Employment practices liability insurance (EPLI)
Directors and officers insurance. If you’re a member of a nonprofit or for-profit board, you might be found personally liable for their decisions. Lawsuits alleging harassment, abuse, discrimination and financial misuse might name you directly (even if you weren’t involved or didn’t know about the situation). A lawsuit puts your personal and business assets at risk.
You have an indispensable or irreplaceable person who works for or owns your business (including yourself).
Key person insurance
Do you have an indispensable partner or key employee who keeps your business running? A key-person can be an owner, a high-volume sales producer or even a namesake synonymous with your business. Key person insurance is a type of life insurance that provides a temporary revenue stream after a critical staff member dies, leaving you time to hire a replacement or sell your business.
You have an indispensable or irreplaceable person who works for or owns your business (including yourself).
Key person insurance
Do you have an indispensable partner or key employee who keeps your business running? A key-person can be an owner, a high-volume sales producer or even a namesake synonymous with your business. Key person insurance is a type of life insurance that provides a temporary revenue stream after a critical staff member dies, leaving you time to hire a replacement or sell your business.
Your business (owned or leased) relies on a landmark or high-profile location to draw a significant amount of business.
Loss of attraction endorsement
If your business relies on a famous structure (landmark) or a venue that attracts customers (like a mall or hotel), you might lose income if people avoid the area because of a violent attack or weather event. Loss of attraction is a form of business interruption insurance designed to help with lost revenue.
You have a commercial property that is accessible or visible to
the public or employees.
Workplace violence or active shooter insurance
This helps with victim coverages (medical, counseling death benefits), liability, business income and extra expenses due to acts of workplace violence or deadly weapon attacks (gun, knife, etc.) at your business.
You are an advertiser, marketer, author, journalist or publisher.
Media liability insurance
If you’re a publisher, author, journalist or advertiser your risk of being sued is much higher than most businesses and general liability will not cover you.
You are active on social media.
Media liability or general liability or
commercial umbrella insurance
Check your general liability limits if you’re active on social media or other media platforms. You might need to increase them and/or get a commercial umbrella or a media liability policy. Many people self-publish and interact with a global audience (even though they’re not in a traditional media career), and the risk of a defamation lawsuit remains possible.
Your employees travel domestically.
Travel insurance
If you or your employees travel for business within the U.S., add travel insurance to your coverage. It comes in handy for travel cancellation and medical payments in an unexpected illness or accident.
Your employees travel internationally.
Travel insurance
If you or your employees travel internationally it helps with cancellations, medical payments and coverage for living expenses due to extended travel delays. Consider adding kidnapping and ransom insurance if you travel to high-risk areas. It can help with negotiations, payments, media management and more.
You have employees or volunteers.
Employee theft or crime insurance
This helps to recoup costs associated with theft and loss due to an employee’s actions. If your employee is part of a data theft ring or embezzles hundreds of thousands of dollars, you might not be covered due to employee exclusions on your policy.
You store data, use the internet or process payments.
Cyber liability or data breach insurance
If you process or store client personal information on your servers or even in the cloud, you could be liable for a data breach. Fines and required mitigation efforts (like providing credit monitoring services for a year) can get expensive. Think of cyber liability coverage the same way you would a catastrophic event — it can be as costly as a total loss of property situation.
Your employees drive vehicles for business use.
Commercial auto or fleet insurance
If your employees drive company-owned vehicles, you need coverage.
Your employees drive their own vehicles for business use.
Hired and non-owned auto (H/NOA) endorsement.
If your employees drive their personal vehicles to make deliveries, visit clients, run errands or tasks associated with work (like a coffee run), consider H/NOA. If they get in an accident you could be liable if their insurance doesn’t cover it.
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If your employees drive their personal vehicles to make deliveries, visit clients, run errands or tasks associated with work (like a coffee run), consider H/NOA. If they get in an accident you could be liable if their insurance doesn’t cover it.
This content is for informational purposes only, should not be considered professional, financial, medical or legal advice, and no representations or warranties are made regarding its accuracy, timeliness or currency. With all information, consult with appropriate licensed professionals to determine if implementing any recommendations would be in accordance with applicable laws and regulations or to obtain advice with respect to any particular issue or problem.
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