As an active member in the Young Presidents’ Organization (YPO), an organization of young chief executives, I get asked many questions about proper commercial insurance coverage. While each industry has its own specific nuances in coverage needs, there are several key coverages that every business owner or executive should carry. To protect the business and its bottom line:
- Business owners policy (BOP): A business owners policy packages all required coverage a business owner might need. Often, BOPs will include business interruption insurance, property insurance, vehicle coverage, liability insurance and crime insurance.
- General liability insurance: Every business, even if home-based, must have liability insurance. This insurance provides your business with financial protection that helps keep your assets from becoming vulnerable in the event of a lawsuit. The standard policy provides both defense and damages if you, your employees or your products or services cause, or are alleged to have caused, bodily injury or property damage to a third party.
- Property insurance: If you own a building or lease an office, along with any inventory, office equipment and furniture, you should consider purchasing a policy that will protect your property if you experience a fire, vandalism, theft, smoke damage, etc. There is even an option you may want to consider, which protects your earnings or extra expenses should the business be unable to operate due to a covered loss.
- Commercial auto insurance: Commercial auto insurance protects your company, employees and the vehicles you own, lease, rent or borrow. If you do not have company vehicles, but employees drive their own cars on company business, you should have non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage.
- Workers compensation: Workers compensation provides insurance to employees who are injured on the job. This type of insurance provides wage replacement and medical benefits to those who are injured while working. In exchange for these benefits, the employee gives up his or her right to sue the employer for the incident. As a business owner, it is very important that you have workers compensation insurance to protect yourself and your company from legal complications.
While each industry has its own specific nuances in coverage needs, there are several key coverages that every business owner or executive should carry.
Professional liability insurance/errors and omissions insurance: This policy provides defense and damages for failure to render or the improper rendering of professional services. Your general liability policy does not provide this protection, so it is important to understand the differences.
Management liability: In everyday management decisions and business relationships, you may encounter sudden and pricey lawsuits brought by a wide range of possible plaintiffs. Those legal actions can come from employees, investors, customers, suppliers, competitors and creditors, to name just a few. With management liability insurance, you can handpick from five coverage parts—directors & officers liability, employment practices liability, fiduciary liability, crime and kidnap and ransom/extortion—each of which responds to the management liability exposures private and public companies face.
Data breach: If your business stores sensitive or nonpublic information about employees or clients on its computers, servers or in paper files, the business is responsible for protecting that information. If a breach occurs, either electronically or from a paper file, a data breach policy will provide protection against the loss.
The coverages listed here provide the basic framework a commercial program should encompass. In response, we provide all of our clients a customized insurance solution that addresses their specific business challenges, and helps optimize their opportunity for success while reducing the total cost of risk.
Our goal is to give our clients the freedom to operate and grow their businesses with safety and confidence, whether locally, regionally, nationally or abroad.
This article was originally published in the June/July 2016 issue of Worth.