Every business needs business insurance, but with all the different types – general liability, errors and omissions, employment practices, and more – asking the right questions is almost as difficult as picking the right coverage.
What you don’t know CAN hurt you – and your business
Risks are inherent to business so limiting risks, of all kinds, should be a CEO/business owner’s priority. We’ve found that in fact, it is, and in their efforts to reduce risk their first step is to get business insurance. Yes, business insurance can help reduce the risk of losing money, such as from a lawsuit or a natural disaster. However, there are many questions that need to be answered and issues addressed to truly reduce risk.
Creating the right business insurance coverage for my clients takes a great deal of communication. Buying business insurance is not as easy as buying car insurance; there are a lot of things I need to know about your business to deliver the right policy. The conversations become very granular about how my clients run their businesses, and in some cases, my questions require them to have internal conversations that they’ve never had before.
Many times, their initial answer is, “I don’t know,” or “I’ll have to get back to you on that.” These are questions that I ask several times a week, and at the same time, questions that my clients have never even thought about.
All your ducks in a row
The more questions you can answer about the way your business runs, the better your business insurance coverage will be. So, although business insurance is vital, and something a business should have during their start-up phase, they should also be thinking about the foundation and structure of the business, and its policies and procedures. If you don’t know how your business plans to handle specific situations, how can your insurance cover it?
Believe it or not, this is the SHORT list to help determine your business insurance requirements
There are hundreds of industries and hundreds of thousands of businesses within each one – being run by individuals who have their own ideas on how to be successful. From location to office culture to budgeting to pricing, even businesses in the same industry, the same town, the same street, and the same building can be very different. Consider Burger King sharing the same space as Popeye’s! Or your local mall! You get the picture.
Regardless of your industry, location, or owner, here’s a list of things to review (and potentially develop) to reduce risk and create a better fit for your business insurance coverage.
We’ll start off big. Do you have…
• An employee manual
• Secure technology
• Security in your office/building (such as video camera and door alarms)
• Ownership of your office/building
• Employees who are mostly in the field
• Employees who are mostly in the office
• Employees who are mostly in a vehicle
• Safety gear
• Complete and functional first aid kits
• Fire drills
• Mobile devices that you distribute to employees
Now let’s get more detailed. Do you have…
• A sexual harassment policy
• Sexual harassment classes
• A social media policy
• A policy for drug testing
• A technology security policy if employees lose devices, either personal or company, with confidential information on them
• A budget for security and how much is it
• Union or non-union employees that have specific wage and hour requirements
• Checks and balances amongst your c-level decision makers, such as checks that require two signatures
• Your total payroll for this year, and is it going to change next year
• A website that collects client confidential and personal information
• A credit processing procedure that encrypts credit card numbers
• An email encryption procedure for emails containing personal data
• Safety procedures if any equipment is damaged or fails
• Safety policies for driving vehicles
• Employee job descriptions that include giving clients advice
• A business in an industry that requires annual continuing education credits and/or certifications
• Subcontractor agreements that require them to have their own insurance
• A documented hiring and firing process
• A firing process that includes warnings and probation
• A human resources employee, department, or outsourced service
• Documented policies and procedures for handling dangerous or toxic substances
Claims: Filing one or defending against one, business insurance is a necessity!
Your head may be spinning from the above lists, but if you haven’t at least given them some consideration, stop what you’re doing and do it now. Yes, now!
Claims can come at any time, from anywhere. You most beloved employee could have been watching late night television and the commercial from the sexual harassment lawyer started them thinking. “Yes, my colleague did say something offensive last week and I’m going to sue!” Or your top technician makes an uncharacteristic mistake and damages an expensive piece of equipment that shuts down your shop for two days while it’s being repaired. The last thing you want for your business is to have to pay for the lawyers or for the payroll and repairs.
The value of having documented policies, procedures, budgets, and security plans in place cannot be overstated. When there is no ambiguity on how your business is being run, you have mitigated risk to the point of almost being riskless…almost. There is no way to remove all business risks, but when you combine detailed documentation with strategically designed insurance coverage, you can rest a little easy.