“PREPARED FOR THE FUTURE”
(Mar. 30, 2020) — Insurance is rarely as appreciated as it should be. For some, it is treated as a necessary expense to do business, a common view among business contractors. For others, it is considered a waste of money, something they only pay when it is mandatory, such as auto insurance for your fleet.
However, insurance is there to provide coverage when disaster strikes, and now could be the perfect time for businesses to maximize business insurance coverage according to experts. Let’s take a look at why it is so, and the steps businesses can take to maximize theirs starting today.
Review Your Current Level of Coverage
The first thing you should do as a business owner is to review your current level of coverage. Do you have all of the coverage you’re mandated to have? If you’ve added delivery drivers or bought a van for the business, do you have commercial auto insurance? Have you set up worker’s compensation coverage to cover your new employees?
The type of coverage you need will also differ depending on your business’s scope of service. If you’ve begun offering consulting services in addition to selling products, you may need to take out an additional insurance policy to cover the costs if someone says your bad advice caused them to land in the hospital.
Determine What Coverage You Really Have Relative to What You Need
Let’s say that you already have the necessary types of insurance in place. But, do you have the level of protection you require? A classic example of this is carrying the minimum level of auto insurance, though you probably won’t be able to afford to pay for repairs after a collision, not to mention the possible loss of product an accident may have caused.
Another common oversight is general liability insurance. This type of policy will cover costs above and beyond what property insurance and auto insurance does and will vary depending on the insurer.
The Hartford Insurance’s general liability insurance, for instance, will cover the basics like third-party bodily injury or damage caused by one of your employees. But it will also cover things such as reputational harm or advertising injury. They will also cover the liability caused by errors and omissions when providing service as well.
Make sure that you compare the coverage you have versus the coverage you need. This is commonly referred to as an insurance gap analysis. Also, you must have the policies in place before there is a claim if you want to enjoy the protection insurance can provide.
Determine What You Want to Self-Fund
Business continuity coverage has come into the spotlight due to the recent coronavirus shutdowns. There are many stories of insurers refusing to pay out due to shutdowns because of the virus. The insurance companies state that the policies clearly state that they only pay if the business was shut down due to physical damage, a common occurrence if there was a fire, flood or tornado.
Many insurers claim that a shutdown due to a disease isn’t part of their covered events, and while there may be a few insurance policies that cover a disease outbreak, they’re far from being the norm. Healthcare facilities, however, usually already have coverage to cover the costs of a shutdown as they sterilize the premises, whether it was because someone with an exotic disease arrived or they had cases of drug-resistant strains pass through their doors.
For some businesses, they can argue they’ve suffered a loss of access caused by civil ordinance. In this case, they could claim business interruption coverage under their property insurance policy. A good example would be wedding venues that aren’t allowed to hold weddings during the coronavirus shutdown.
Business owners are starting to realize that they need a financial backup plan. One option is setting up an emergency fund. Save up three to six months of operating expenses as retained earnings. Another option is signing up for business continuity insurance that will cover your operating expenses after a disaster.
However, the policy must be in place and cover the particular disaster that shuts down your business. Your business needs to consider the risk it faces if it were forced to shut down and the odds such a shutdown may occur.
A three-month emergency fund will cover the bills, even if the business continuity insurance doesn’t. Determine how much risk you want to cover, and then seek insurance coverage to address the rest. This is similar to reviewing your auto insurance and selecting a policy based on both coverage and the deductible.
You need the right level and types of insurance coverage in effect when disaster strikes to see the benefits it can provide. Understand the policies you have and make adjustments now so that you are prepared for the future.
Sharon Rondeau has operated The Post & Email since April 2010, focusing on the Obama birth certificate investigation and other government corruption news. She has reported prolifically on constitutional violations within Tennessee’s prison and judicial systems.