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While starting out with a business owner’s policy (BOP) or commercial package policy (CPP) is a good first step of coverage, it is only that — the first step. There are risks that business owners are oftentimes unaware of and require additional, specific coverage. read further to learn about each risk.
1) PROFESSIONAL ERRORS
$20 billion
Amount small businesses pay out of pocket every year in liability costs*
Professional liability insurance provides protection for defense costs and settlement payments for claims that a firm's work or advice was inadequate, contained errors, or failed to meet specifications.
A YES to any of these questions means there may be risk that requires additional coverages.
Does the business require a professional certification or extensive training to practice?
Does the business provide a service or manufacture a product for customers?
Does the business provide advice to others?
* Institute for Legal Reform (http://www.insuranceqna.com/liability-insurance/liability-lawsuits.html)
2) INTERNATIONAL BUSINESS
One of your employees becomes severely ill while on a business trip overseas, and needs to fly back to the U.S. on a private plane while accompanied by a medical professional. Will your business insurance cover these expenses?
An international policy can offer global coverage and protection for all facets of doing business outside of the U.S. Learn more about your international risk.
A YES to any of these questions means there may be risk that requires additional coverages.
Does the business import raw goods for manufacturing and selling in the U.S.?
Does the business export goods or services outside the U.S.?
Do the business’ employees travel internationally?
3) BUSINESS INTERRUPTION
25%
Percentage of businesses that never reopen after a major disaster.*
While many policies offer business income coverage, it oftentimes does not provide the right level of protection against water damage, vandalism, power loss, data breach, equipment breakdown, food contamination, and more.
A YES to any of these questions means there may be risk that requires additional coverages.
Can the business pay rent, salaries, and other fixed costs during a shutdown?
Can the business afford moving to a temporary location?
Can the business survive without income for an extended period of time?
*Institute for Business and Home Safety
4) LOSSES BEYOND LIMITS
$105 billion
Total liability costs for small business in one year.*
Commercial umbrella insurance provides an extra layer of liability protection by covering legal costs and settlements once other liability coverage limits have been reached.
A YES to any of these questions means there may be risk that requires additional coverages.
Does the business have contracts with vendors or clients that require expanded coverage?
Is the commercial property open to the public?
Do employees use their cars for business?
*U.S. Chamber Institute for Legal Reform
5) DISCRIMINATION AND HARASSMENT ALLEGATIONS
The median loss caused by the frauds in our study was $145,000.*
Employment practices liability coverage protects against claims brought by employees for wrongful employment acts based on termination, discrimination, workplace hostility, defamation, and more.
A YES to any of these questions means there may be risk that requires additional coverages.
Does the business have employees?
Has the business terminated an employee in the past year?
Does the business offer leave to employees for illness or hardships?
*Association of Certified Fraud Examiners
6) CRIME
$155,000
The median loss caused by the frauds in our study was $145,000. Additionally, 22% of the cases involved losses of at least $1 million.*
Hanover Fidelity & Crime Advantage offers stand-alone coverage options for employee theft, fraud, embezzlement and other crimes. Learn more about the types of activities businesses should be aware of that present crime risk.
A YES to any of these questions means there may be risk that requires additional coverages.
Does the business hire outside personnel or contractors to complete work?
Do employees have access to valuable merchandise?
Do employees have access to payroll, expense checks and petty cash accounts?
*Association of Certified Fraud Examiners
7) DATA BREACHES AND CYBER-ATTACKS
75%
Percentage of third-party produced enterprise software containing security vulnerabilities*
Cyber liability and data breach coverages provide complete protection for data breach or cyber-attack incidents, including expenses and financial damages that arise from lawsuits related to a data or security incident.
A YES to any of these questions means there may be risk that requires additional coverages.
Does the business manage or store personally identifiable, personal health, or financial information?
Does the business maintain a database of employee or customer information?
Does the business collaborate with vendors who store or manage sensitive data?
*Open Web Application Security Project (OWASP)
8) EQUIPMENT BREAKDOWN
Common equipment breakdown scenarios:
Restaurant: A damaged electrical panel can leave a restaurant without power for a week.
Medical office: A broken freezer can destroy temperature sensitive drugs.
Manufacturer: Heavy accumulation of sediment can cause a boiler to shut down.
Simply put, every business needs equipment breakdown coverage. It covers damage to high-tech equipment, boilers, machinery, electrical equipment, and more by “internal” causes like mechanical failure, electrical arcing, and other malfunctions.
A YES to any of these questions means there may be risk that requires additional coverages.
Does business own/lease expensive manufacturing equipment?
Does the business use technology such as computer equipment, or cloud storage to conduct business?
Does the business require equipment to conduct business?