While you are likely aware of your business's need for commercial insurance or insurance that protects your business from unexpected events, it’s challenging to know where exactly your liabilities fall and what different types of insurance match your specific risks.
In times of economic uncertainty, the need for appropriate business insurance is even greater. With ups and downs in the market and tighter financial situations, a commercial insurance coverage gap could make a huge difference in the financial solvency of your business.
How do you know where your potential business insurance gaps are and what coverage you need?
Here’s a breakdown of some commonly overlooked commercial insurance coverage gap situations for small businesses and potential insurance solutions that can close them.
Lawsuits by Employees or Customers
There are several reasons why an employee could sue your business. Management is not immune to these risks, and directors and officers can be sued for a variety of reasons.
Common reasons include, but are not limited to:
- Sexual harassment
- Discrimination
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
There’s also a chance that a customer could sue your business under a claim that you failed to complete services in a satisfactory manner. If you work with the public or customers directly, you may be liable for lawsuits.
Potential solutions:
- Employment Practices Liability Insurance: Helps protect against lawsuits filed by employees who claim their legal rights as employees have been violated.
- Directors & Officers Insurance: Safeguards directors and officers against the financial and reputational risks that come with responsibility.
- Professional Liability or Errors and Omissions (E&O) Insurance: Protects against claims directly related to your professional services.
Physical Loss of Property
Events like a fire, flood or a break-in could result in the physical loss of property, which could result in having to close all or part of your operations. During this time when your normal operations are interrupted, you’re still expected to pay your typical expenses, such as payroll and loan repayments and may incur other costs, such as relocation.
Potential solution:
- Business Interruption Insurance: Helps replace lost income if your business temporarily cannot operate after a covered event, such as property damage.
Data Breaches and Cyberattacks
Technology is in a state of perpetual advancement, which means cyberattacks also continue to advance. A cyberattack or data breach could happen to a business of any size, but smaller businesses often are more vulnerable as they may not have a designated IT or Cybersecurity department.
Potential solution:
- Cyber Liability Insurance: Risk mitigation and cyber liability insurance that can keep up with the rapidly changing technology to protect your business from cyberattacks.
Employee Accidents and Injuries
If you employ individuals who work with machinery, drive a company car or deliver goods, you need to be sure that you and your people are protected from accidents and injuries while on the job.
Potential solutions:
- Transportation, Logistics and Distribution Insurance: For risk management dedicated to the transportation industry with experts specifically versed in supporting businesses in aviation, trucking and auto services.
- Worker’s Compensation: For immediate post-injury response, medical management and return to work programs that help you take care of your people and also protect your business.
It Is Personal. It’s Your Business.
You’ve worked hard to get to where you are with your business, so it’s critical that you make sure it’s protected no matter what the future holds — both from unexpected challenges and economic uncertainties. These common gaps are just some examples of how small to medium-sized businesses could be exposed to risk that blanket insurance policies may not cover in a crisis.
For informational purposes only. Insurance services provided by NFP Property & Casualty Services, Inc. (NFP P&C), a subsidiary of NFP Corp. In California, NFP P&C does business as NFP Property & Casualty Insurance Services, Inc. (License # 0F15715).
