You know your business needs insurance.
You’ve probably discussed the need for property coverage for any buildings or contents and the need for General Liability in case of property damage or bodily injury. If you have Commercial Auto or Workers Comp coverage needs, you’ve probably talked those through with your agent as well.
However, many business owners end the conversation there. Insurance is expensive and the terminology can be confusing. If your agent talks about other optional coverages, you may be unsure of what else is important to consider.
There are many additional insurance options that you may not realize you need. Here are the six most commonly overlooked coverages that could be the difference in keeping your business open or closing the doors forever:
1. Cyber Insurance
In August 2020, Interpol reported:
"Cybercriminals are developing and boosting their attacks at an alarming pace, exploiting the fear and uncertainty caused by the unstable social and economic situation created by COVID-19.”
Cyber Insurance is critical. The need has never been greater than it is now as organizations have had to rapidly equip employees with remote work capabilities. However, cyber insurance is also complicated. There is no one “standard” policy so the wording needs to be reviewed carefully by an experienced agent.
Read also: How to Insure a Business with a Remote Team
Cyber coverage can range from very basic; only covering reimbursement of expenses in the event of a data breach, to much more comprehensive coverage for extortion, hacking, social engineering, wire fraud, third party liability, and more.
Some insurance carriers offer various parts of cyber coverage by adding an endorsement to the business policy. This coverage is typically pretty basic and most likely isn’t going to cover the current issues businesses are facing like phishing or ransomware.
Ask for a quote for a separate, stand-alone cyber policy—you may find the price isn't that much higher for much broader coverage.
2. Insurance for Non-Owned or Hired Autos
If your business doesn’t own any vehicles, you may think you don’t need this one. But, that’s exactly what Hired and Non Owned Auto Liability is designed for—businesses without commercial vehicles. It’s actually two separate coverages, but they are typically combined together in insurance discussions.
Non-Owned Auto Liability
In the event you or your employees are using personal vehicles in the course of business, it leaves the organization unprotected. Personal auto policies do not extend coverage to a business. For example, if your employee runs out to make a bank deposit and causes an accident, they are personally responsible. But the business could be held responsible as well. With Non-Owned Auto coverage, the company's assets are protected.
Hired Auto Liability
If you or your employees ever rent or lease vehicles for business reasons, this coverage is imperative. The most common scenario occurs with rental vehicles. If your employee gets a rental car on their way to an out of town convention for work and they cause an accident, the driver is held responsible. In this case, the business is also vicariously liable and could face out of pocket costs if they don't have Hired Auto Liability.
Drive Other Car Coverage
On the flip side, if you are given a company vehicle and don’t own a personal vehicle or have personal auto insurance, you want to make sure you add Drive Other Car Coverage to your Commercial Auto policy. If there was ever a time when you need to borrow or test drive a car for personal reasons, your commercial auto policy may not cover non-company owned vehicles and you could be exposed.
3. Professional Liability (or Errors and Omissions)
The need for Professional Liability coverage is becoming much more common. It was originally designed for professional service providers such as attorneys, accountants, physicians, engineers, insurance agents, realtors, and those kinds of professionals. It provides coverage when the end product is a professional opinion.
More industries are now in need of this coverage and it is commonly offered for contractors, advertisers, and consultants of all types. For example, an HVAC contractor that typically repairs systems wouldn’t necessarily have a need for professional liability. But, if in the process of their work, they deviate from the original system layout and because of that deviation the HVAC system fails, it could be considered professional guidance outside the typical scope of work and would fall under professional liability. Without this coverage, the General Liability policy could decline, leaving the business to pay for the loss on their own.
4. Employment Practices Liability
If you have employees, then it’s also a good idea to consider an Employment Practices Liability policy. This policy can pay legal expenses and other fees for your business if there are ever allegations of unfair hiring or terminations, discrimination, harassment, incorrectly paid wages, and things like that. It not only protects the business if they are the ones accused of the treatment (first-party liability) but also if the harassment was from people your business work with, for example, vendors or delivery drivers (third party liability).
Insurance experts are predicting a rise in Employment Practices claims for a multitude of reasons...from risks associated with temperature checks to remote working time and wage issues, to whistleblowing and retaliation.
A quick note - Employment Practices Liability is becoming increasingly difficult to secure for businesses who have not purchased it in the past, and at least in the immediate future, pricing will continue to increase. This is one you really can't afford to wait on.
5. Employee Benefits Liability
If your business has employees and offers benefits such as health insurance, pension, vacation, tuition assistance, unemployment, etc. this coverage is a must! It provides protection for any administrative errors or incorrect explanations of benefits by the business.
Benefits administration is a tedious process and mistakes do happen. For example, if a new employee was inadvertently left off the health insurance and 6 months later had a serious injury only to realize their health insurance was not in effect, Employee Benefits Liability would respond. Otherwise, your employee would most likely sue the business directly to get the medical bills covered, at the least making it an uncomfortable work environment for all involved.
6. Foreign Liability
Depending on the type of work you’re doing and the frequency of international travel you need to do, you may need to consider foreign liability coverage. It provides coverage for bodily injury and property damage occurring overseas, including claims and suits brought in foreign jurisdictions.
A typical General Liability limits coverage to charges filed in a defined territory, which is usually the United States, Canada, and Puerto Rico. Most will not cover legal expenses and lawsuits brought in other foreign courts.
Foreign policies are not a one-size-fits-all solution. Because there are so many different potential issues to consider, Risk Management Magazine states:
"Organizations with overseas risks should consider consulting with an experienced insurance broker and/or coverage counsel to advise them and negotiate optimal policy language suitable for their risk environment".
These six insurance coverages are a good start at comprehensive insurance protection for your business. Keep in mind that depending on your exact operations, there could be special insurance you may need to take a look at.
Things like Trash Keepers coverage for apartments offering valet trash service and Non-owned Spacecraft coverage for universities sending projects into space on private spaceships are even available—who would've thought?
The best advice?
Seek out an independent insurance agent that can help you consider and identify the potential risks of your unique business and explore your insurance options. Find an agent that is knowledgeable in your industry and one who stays on top of the ever-changing climate.
They are not only well-versed in the types of risks businesses face, but they also know the types of insurance products available to protect your business, and they represent multiple insurance companies, so they have a wide range of products to choose from.
And if these 6 coverages aren’t enough and you want to learn more, check out IRMI’s 101 Common Commercial Lines Coverage Gaps To Avoid. If you do that, you may as well get your insurance license too!
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