Small- and medium-sized businesses frequently have insurance needs that are not covered by the basic property, liability, auto and worker’s compensation coverage policies they have, says Karen Harpole, Corporate Manager for Small Commercial Business at United Fire Group (UFG Insurance).
“Unfortunately, they often don’t discover these coverage gaps until the claim occurs,” Harpole says. “They work under the premise that everything is covered with their existing policies. But in the world of insurance, there is just no way to cover everything.”
One of the best ways to fill these gaps and protect your business is to build a strong relationship with a licensed insurance agent.
“You need the help of an insurance professional who can tailor coverage to protect your business interests, your assets and your future,” Harpole says.
Smart Business spoke with Harpole about basic insurance policies and how to work with your agent to supplement that coverage and secure the future of your business.
What do basic insurance coverage policies provide?
It starts with general liability insurance, a foundational coverage that provides damages and defense if either you, your employees or your products or services cause (or are alleged to have caused) bodily injury or property damage to a third party.
It pays damages that your business is found liable, up to the policy limits, as well as attorney fees and other legal defense expenses.
Property provides coverage for damage from fire, hail, windstorms, burglary and theft and other common perils that occur to your building and any personal property used in your business.
If you run your business out of a home, you should be aware that your homeowner’s policy will typically exclude coverage for any business operations conducted in the home. You would need separate coverage for business operations.
Auto insurance will protect any vehicles that your company owns, leases or maintains. Coverage includes liability and physical damage, as well as medical pay, uninsured and under-insured and no fault coverage, which can be added to the policy by endorsement.
The fourth core is worker’s compensation insurance. It covers the business’s liability under the state worker’s compensation laws to give benefits to employees for accidental injuries they sustain or a disease they may contract that arises out of the course of their employment.
What are some risks that are typically excluded by the basic coverages?
One example would be business interruption or business income insurance, which protects earnings until you’re able to open your doors again following a loss that shuts down your company for a period of time.
It provides coverage for ongoing expenses even though you aren’t able to generate income. There are variations, however, so it’s good to work with an independent agent who can tailor a policy to meet your unique needs.
Other examples are professional liability or errors and omissions (E&O); employment practices liability (EPLI); cyber liability and directors and officers (D&O) coverage.
What’s the best way to identify potential gaps in coverage?
Work with an independent agent to discuss your insurance package.
You can sit down with your agent and go through a checklist that explains the coverage you have and the gaps that might exist based on your current coverage. Your agent can advise you of gaps that are critical and need to be addressed versus those that don’t pertain to your company.
Most agents can offer what’s known in the industry as value-adds such as loss control, risk management tools or general safety training.
These types of services would typically come at a high cost if purchased independently, but can often be provided at a small fee or even free of charge, in some cases, through your agent.
You may be able to mitigate a risk by simply eliminating a practice that doesn’t offer any valuable benefit to your company.
The key is having these conversations on a regular basis and making sure that as your needs change, your coverage adjusts accordingly. If you’ve done your due diligence and found an agent you can work with, it should give you peace of mind that your business and future are well protected against unwanted accidents.
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