Is It Time To Update Your Business Insurance Coverage?

It’s always a challenge for busy owners of growing businesses to find the time to focus on addressing new, increased, and evolving risks. To best protect the business that you’ve worked so hard to build, it’s a good idea to meet with your insurance professional at least once a year to checkup on the current state of your business and its operations.

Rapid growth may require you to upgrade or overhaul your insurance coverage, especially if new risks, clients, investors, or creditors demand more protection or higher limits.

An insurance professional can help ensure your coverage remains appropriately priced and meets your changing needs. As businesses grow, coverage adjustments and additional protections are often necessary.

Consider these key factors when assessing new or emerging risks:

Key Considerations for Growing Businesses

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 social media for marketing and sales

With social media tools like Instagram, Facebook and TikTok, 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 and cyber-attacks

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.