May is Small Business Month and it’s an opportunity for all of us to celebrate the people who truly drive the nation’s economy and define our spirit. Driven by an entrepreneurial spirit and a desire to bring to market a unique idea or to offer a specific skill, there are 28 million small businesses in the US, accounting for 54% of all sales.
To launch and keep a business thriving requires a good amount of passion, a strong business plan, usually a hefty financial investment and a few things most people don’t think about. Like insurance.
With so much at stake, insuring your investment, yourself, employees and property the right way is one of the most important decisions every owner must make. From commercial auto and property to workers’ comp, there are a lot of considerations. So, where to start?
- Know the rules. Check with your state’s Department of Insurance about which coverage is required. As the Small Business Administration points out, “Most states require businesses with employees to pay for workers’ compensation insurance, unemployment insurance, and state disability insurance.” You can find your state’s insurance division here.
- Imagine the unimaginable. Before you can decide how to protect your business it’s important to understand the threats. With so many commercial insurance options first figure out your needs and your level of exposure. Fire, slip and falls, loss of income, defective products, injured employees or customers, equipment breakdowns. Don’t say, “That won’t happen to me.” Those are the famous last words of too many business owners. Look at each step of your business, imagine the worst and then protect against it.
- Employment Practices Liability Insurance. Employee relations sometimes sour. Most business owners value and respect their employees, and often treat them like family. But disputes can happen and business owners can protect themselves should those disagreements escalate into litigation. Employment Practices Liability Insurance protects employers from wrongful acts that may arise out of their employment practices (such as race, age, sex discrimination, wrongful termination, failure to promote and retaliation). This coverage is quickly becoming a staple in today’s insurance market.
- Find security in a digital world. Hackers have breached half of all small businesses in the last 12 months. So, make sure you’re insured against threats that enter your business online. If you conduct transactions or collect personal information digitally, you will want to explore options like Data Compromise coverage and Cyber Risk coverage. Customers may try to take action against you if their information is ever leaked or stolen by a hacker. Data Compromise Coverage typically provides Response Expense Coverage which helps cover the cost of notifying and assisting your clients after a breach. It can also provide Defense and Liability Coverage when this option is selected, which responds to third party action brought against you by those individuals affected by the breach. Additionally, comprehensive Cyber Risk coverage not only provides coverage against damage to electronic data and computer systems from a virus or computer attack but can also protect your business’s liability to third parties if they suffer damage due to vulnerability in your business’s computer system.
- Home is where the heart is. But if it’s also where the business is you need additional coverage. Your homeowners’ policy does not protect your home-based business. Once you assess the risks to your business you will want to consider adding a rider to your policy to cover basic business risks. But that is only the start. Add business insurance to protect your business.
Most importantly, be sure to consult with your independent agent to help you determine the coverage your business needs. You may know how to make a mouth-watering orange, cranberry scone or how to build a kitchen that belongs in Architectural Digest. But that doesn’t make you an expert in insurance. Talk with your independent insurance agent and have them provide a plan that will keep your business protected.