SAFEGUARDS

Growing BusinessSAFEGUARDS

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  • Business Insurance Coverage Check-Up

    Game Plan

    In-Depth

    Address New Exposures

    As a business owner, you can benefit from meeting with your insurance professional at least once a year to talk through the current state of your business and its operations. Have you taken on substantial new contracts with suppliers and clients? Have you added new employees—or changed your hiring or compensation practices? Any changes to your business’s ownership structure? All of these new moves, and many more, can change the complexion of your business’s insurance exposures.

    Growing businesses typically find they need to adjust their insurance coverages—and add new protections—as they evolve and expand. Your insurance protection should be efficiently priced and responsive to your needs.

    These are some of the key considerations for growing businesses when thinking about new or growing exposures:

    • Changes in ownership structure
      Have you moved from a sole proprietorship to a different business structure? If you’ve added new management or officers, you should consider how to manage the liabilities that come with these new responsibilities. For example, if your business has taken on a more layered management structure, directors and officers insurance will protect your key management and board members from allegations of breach of fiduciary duty.
       
    • Adding new products or services
      If your business has added new products or services—are you aware of their potential liabilities? Depending on how it’s written, your business owner’s policy (BOP) may or may not provide sufficient risk protection for your new venture.
       
    • Changes in contractual obligations
      Does the nature of your business operations require you to enter into contracts with clients or suppliers? If you’re taking on new contractual obligations, you’re also potentially taking on new liabilities. Most BOPs include fairly broad liability protection—but coverage terms can vary widely. You should consult with your insurance professional to make sure your business is adequately protected.
       
    • Growing staff—or new hiring and compensation practices
      As your business expands and takes on new employees, you should seriously consider the protection of employment practices liability insurance (EPLI). In the current climate, lawsuits by employees against their employers for employment-related claims like harassment, discrimination, and unfair compensation practices are at or close to all time highs; this type of policy is designed to cover both settlements and legal fees. When evaluating your employment-related risks, don’t forget to include volunteers or interns.
       
    • Use of the Internet for marketing and sales
      With the explosion of social media tools like Twitter and Facebook, businesses are losing a grip on “controlling” their messaging to the public. One result of this is growing exposure to liability lawsuits claiming damages like slander, libel—and misrepresentation of a product or service. You should review your business liability policies, especially your general liability and commercial umbrella policies, to make sure your business is not exposed to excessive risk through its web presence. And periodically review your company’s social media policies as well.
       
    • Data breach insurance
      Data breach insurance is critical for just about any business that stores information electronically or in paper files. Addressing a breach can be a costly proposition, including regulatory requirements, and the efforts that would be required to remedy the damages to customers and your reputation.
    Game PlanGame Plan

    Game Plan

    • When was the last time you discussed your business’s insurance needs with your insurance professional? If it’s been more than a year, schedule an appointment today.
    • To make your review process more efficient, ask your expert if he or she can provide you with some form of checklist to make sure you capture all relevant changes. And keep in mind, the more information they have, the more effectively they can advise you on the coverage you need.
    • Although an annual policy review with your insurance professional is essential, any major new risk exposure should at least trigger a phone call: Ask him or her whether the change in question merits immediate action.
    • Here’s a good place to start for general information about business insurance.
    • Keep in mind that your efforts to control and reduce risk can both benefit your business and your bottom line. For example, do you have clear data practice policies in place for employees? What is your business doing to prevent a data breach? You can learn more about data breach solutions here.
    • The same goes for your employee policies and practices. Some employee-related legal claims are spurious and unpreventable. But in many cases, effective outlets for communication can be a great preventive measure. Clear internal policies that give employees a voice in airing grievances could potentially avert costly legal proceedings. You may want to perform a comprehensive employee practices review along with your insurance review.