2015-01-12
Is Your Small Business Adequately Insured to Protect Your Wealth?

Too many small businesses cut corners (either financial or time) and do not adequately cover their business with property and casualty insurance. Are you among those?

It is critical for a small business to have a Businessowners’ policy and perhaps other liability policy(ies) not only for the coverage of your business property, but most importantly to cover all the significant liabilities that your business may face. Most of the small business owner’s wealth is tied to the business he/she has built. If someone initiates a lawsuit, both the business’ wealth and your personal wealth could be at risk. The business insurance premiums are well worth the peace of mind the policies provide. Lawsuits can be initiated for a whole host of reasons: wrongful dismissal, bad advice, and slips and falls inside or outside the property. Some of these risks would be covered in a typical businessowners’ policy and others require a specialty policy. Without the proper type of insurance and adequate coverage, the owner could lose far more than they can afford.

Two types of risks you should seriously consider are employment practices liability insurance and professional liability insurance. Recent high levels in the unemployment rate have led to increases in claims under the Equal Employment Opportunity Act of 15%; the Equal Employment Opportunity Commission indicated that claims are at their highest level in the 44 year history of the Commission. These claims are generally excluded from the typical businessowners’ insurance policy. Many smaller businesses, especially those who consider their employees to be an extension of their family, do not have the specialty employment practices liability insurance policy necessary to cover this risk because they feel it to be too expensive or unnecessary for their business. Not terribly long ago a client of mine who had declined to have this coverage then had the unpleasant experience of being sued by a former employee who claimed age discrimination when the employee could no longer physically perform the duties required for her job. She was offered a different job which she refused, and when she was subsequently terminated, she sued. Engaging attorneys to represent my client, and the process of defending the claim consumed my client taking much valued time away from running her business. Even though my client ultimately triumphed in the matter, the loss in the growth of the business as a result was hurtful. Although not inexpensive, my client has been covered with employment practices liability insurance ever since and certainly sees the value of the coverage.

Many consultants whose businesses are providing advice and counsel of various kinds to their clients neglect to follow advice of their insurance professionals that they should be covered with professional liability insurance. Like the employment practices liability insurance, part of the greatest value in the coverage is knowing that the insurance company will engage legal counsel if you are sued and defend you. By way of example, consider the computer consultant who writes a software program for a client. The computer consultant is the expert in the code and the creation of software, but requires significant input from his/her client to be able to personalize it to his/her client’s business. If there is any kind of misinterpretation of information exchanged between his/her client and the consultant which results in the software not performing as expected, he/she could be sued. That misinterpretation could be no fault of the computer consultant, but it will result in major time away from other projects to be able to defend the lawsuit. Again, although professional liability insurance is not inexpensive, it often is well worth the price.

Should you be interested in either of these business insurances or having us review the insurance that your business has in place, please call us at your earliest convenience!