Business insurance is vital to companies of all sizes. Financial protection can be particularly important for small businesses. If you own or operate one, it is crucial to have coverage for all the risks you face. If you aren’t fully protected, one lawsuit, storm damage repair, or other incident can produce a burden that threatens your company’s financial future. In doing so, it also poses a threat to your employees, customers or clients, and anyone who relies on your business.
For example, hackers continually find new and more effective ways to steal data or otherwise victimize businesses. If someone breaches your company’s digital defenses in a successful attack and you don’t have cyber insurance, you can be left paying for things like response expenses out of your revenues or savings. Sadly, many small businesses are forced into bankruptcy each year by financial burdens that an insurance company could have handled if the organization had carried the proper coverage. It is especially unfortunate when you know that it’s often possible to get hundreds of thousands of dollars of protection for as little as a few hundred dollars annually.
Consequently, it is crucial to learn about business insurance and how it can protect your company. When you do, it is important to know that there are many types of insurance coverage.
You are likely to learn about general liability insurance, workers’ compensation insurance, professional liability coverage, and commercial auto insurance early in your research. However, there are several lesser-known standalone policies or coverages you can add to another policy, and they can be just as important to your company’s financial protection.
As we venture into 2024, it is imperative for business owners to explore beyond conventional policies and educate themselves on the many hidden gems that offer specialized protection. This article will shed light on lesser-known business insurance coverages, explaining their significance and providing insights into how they can fortify your business against risk.
Business Interruption Insurance
While business owners are often familiar with property insurance, an aspect called business interruption insurance plays a vital role in mitigating the financial impact of disruptions. This coverage steps in when your business operations are temporarily halted due to natural disasters, fires, or other unforeseen circumstances. It helps cover ongoing expenses like rent, utilities, and employee salaries during the downtime, ensuring that your business can weather the storm and resume operations smoothly.
Employment Practices Liability Insurance (EPLI)
In an era where employment-related lawsuits are on the rise, EPLI provides essential financial protection. This lesser-known coverage protects businesses against claims arising from employment-related issues, including wrongful termination, discrimination, and harassment. As workplace dynamics evolve, having EPLI in place is crucial to shield your business from the economic repercussions of legal actions initiated by current or former employees.
Directors and Officers (D&O) Insurance
For organizations with a board of directors or officers, D&O insurance is a lesser-known but invaluable coverage. It safeguards these key decision-makers from personal financial liability if they are sued for alleged wrongful acts in managing the company. D&O insurance not only reassures top talent considering serving on boards, but it also provides a safety net for those making critical decisions on behalf of the business.
Equipment Breakdown Insurance
Businesses heavily reliant on machinery and equipment should consider equipment breakdown insurance. It steps in when essential equipment malfunctions due to electrical issues, mechanical failure, or other covered perils. It not only covers the cost of repairing or replacing the equipment but also compensates for the business income lost during the downtime.
Product Liability Insurance
While liability insurance is a common consideration, product liability insurance is a lesser-known subset that is crucial for businesses involved in manufacturing or selling products. This coverage protects against legal claims arising from injuries or damages caused by a product. In a litigious environment, ensuring your business is shielded from potential product-related liabilities is essential.
Cyber Insurance
Most business owners are aware that cybercrime is rising. It has been for some time, and no end is in sight. What many small business owners don’t know is that companies like theirs are increasingly the target of system hacks and cyberattacks. It would be understandable to think that bad actors only focus on larger companies with deeper pockets. However, the reality is cybercriminals recognize that smaller organizations may have less robust digital defenses, and therefore, they go after them. Cyber insurance policies vary in what they cover. At a minimum, you should have protection that can pay for response expenses like notifying customers and related actions, which can be very costly.
Umbrella Insurance
Insurance policies typically limit the amounts they will pay for covered incidents. You choose the limit you want and it is reflected in your premium—the higher the limit, the higher the premium. A type of insurance that some people aren’t familiar with is umbrella insurance. It provides an added layer of protection, paying amounts that exceed those of an underlying liability policy (up to its own limit). A valid question is, “Why wouldn’t I simply increase the limits on the underlying liability policy?” In many cases, it can cost less to have lower limits backed by umbrella insurance.
Conclusion
Insurance policies and the financial protection they deliver are crucial for small businesses. Those without a sound insurance strategy are at risk of an economic disaster that can jeopardize their ongoing operations. However, companies with the right policies can operate confidently, knowing their insurer will stand behind them and minimize the financial consequences if an incident occurs. That knowledge provides peace of mind to business owners, employees, and other stakeholders.
In the intricate tapestry of business insurance, the lesser-known coverages often hold the key to comprehensive protection. Business interruption insurance, employment practices liability insurance, directors and officers insurance, equipment breakdown insurance, and product liability insurance are just a few examples of these types of insurance. Each is essential for any company that needs it to fortify its business against the targeted risks.
As you navigate the evolving landscape of business insurance in 2024, exploring these essential policies and coverages can be the differentiating factor in ensuring the resilience and longevity of your enterprise.
