Overlooked Insurance Coverages for Small & Medium Businesses
When running a business, an important part of your job is knowing how to properly protect your business. Implementing a comprehensive insurance program can be intimidating, cumbersome, and confusing. Many people purchase policies to cover what they “have to” cover in order to be in compliance with landlords, contracts, etc. Taking a deeper dive to evaluate what is more likely to happen is a better way to protect your business from what can truly cause a financial loss.
Cyber & Privacy Liability - Forty-three percent of cyber-attacks target small business. Cyber policies protect your business from a variety of compromises and threats to your data. Many people have the misconception these policies only apply if you conduct business online. While there is coverage for e-commerce, many data breaches occur from viruses & malware, phishing attempts, and stolen or lost devices to name a few. Fifty percent of small and medium businesses reported they had data breaches involving customer and employee information in the past 12 months. The financial impact of these breaches are staggering. The average cost to businesses after a data breach due to damage or theft is nearly $880,000. After the breach, businesses average nearly $1 million in lost business. Many of these businesses close their doors within six months of a breach. Stand-alone cyber policies are relatively inexpensive and provide you with the proper coverages and limits should you have a breach. Many of the add-on coverages from traditional insurance carriers, don’t offer the breadth of coverages as these stand-alone policies.
Directors & Officers Liability - If your business is an LLC, Corporation or Non-Profit, you should be purchasing Directors & Officers Liability (D&O). D&O policies protect the officers, managing members, or board members of a company from personal liability in the event of the claim alleging negligence or an error by the company or the directors & officers. Protection from personal liability is not available with other policies.
Employment Practices Liability - Claims stemming from employees alleging harassment, discrimination, or wrongful termination are covered by an Employment Practices Liability policy (EPL). In the event an employee or former employee files a claim against your company, these policies cover the legal costs and damages if found guilty. Legal fees for these claims tend to be very expensive so having a policy in place can save a lot of money if you are hit with a lawsuit. Many times D&O and EPL policies can be written together on the same policy.
Having adequate limits - While having the proper coverages are important, it is also important to make sure your limits are adequate. As your business grows, so does your exposure to risk. It is important to annually evaluate your limits to make sure you are properly protecting your business. Some policies apply penalties if your limits are inadequate and you sustain a loss.
If you have questions regarding any of these policies or are interested in seeing quotes, feel free to contact me at 925-942-4635 or JordannC@heffins.com.
Jordann Coleman '04 is the vice president of Heffernan Insurance Brokers in Walnut Creek and is currently serving her first term on the Alumni Board of Directors.