Published: February 2014
The question of whether you have enough business insurance isn't likely to be top of mind. Many business owners think about their coverage once a year — when it's time to renew — or worse, only when disaster strikes. Yet certain events can spark a need for more protection, such as adding staff, launching a new product or service or expanding into a new facility.
Your business owner's insurance policy may not be keeping up with your success. Here are some situations that may call for a change in your coverage:
Developing new offerings may affect the type and amount of coverage your company needs. For example, you may need more liability insurance if you open a retail operation, begin allowing employees to work off-site or add contractors to your staff. If you outgrow your old stockroom and need more space to store inventory, you'll also likely need more insurance. What if a supplier goes out of business or its warehouse burns down? You may want to look into insurance that helps replace your lost profits.
Growing your staff or the amount of data your company manages could leave you with increased risk of property damage, theft and data breaches, as well. For example, a 2013 survey by Pricewaterhouse Coopers found that one-third of business owners underestimate the repercussions that cyber crime can have on their companies, yet 61 percent of consumers would stop using a company's product or service after a breach. These vulnerabilities can be mitigated with the right property and cyber crime insurance protection.
Having liability insurance for directors and officers helps cover legal issues that arise from alleged or actual misconduct by company directors and officers. Policies typically provide protection for errors, misstatements, omissions and breaches of duty. Some policies extend coverage to employees. Many prospective directors and officers may want this type of policy in place to help protect their personal assets. In addition, investors often require companies to establish these policies as part of their funding conditions.
Moving from leased space to a company-owned facility may change the amount or type of property insurance your company needs. As a property owner, you'll likely be responsible for the cost of items that a landlord previously insured, such as signage, roofing and contents of the building. In addition, if you move into a larger building, you may have additional furniture, equipment and inventory to insure.
You may also want to consider business income coverage, especially if you plan to rent portions of your building to other tenants. This type of policy can help to cover operating expenses and rental income if your property needs to be rebuilt because of a fire or other unexpected disaster. In addition, loss-of-use coverage may help to pay for a temporary facility if significant repairs need to be made to your structure.
Adding vehicles or expanding the way they are used can also affect your insurance needs. If more employees are using company cars and trucks, or if they drive greater distances, your company's risk may increase. Introducing a new service related to additional vehicles, such as making deliveries or transporting people or goods, may also require a policy upgrade. Since these uses carry greater risk, you may decide to increase your liability limits. You may also want coverage that protects employees when another employee is driving and causes an injury.
For more information, contact your local insurance agent, call Allstate at 888-322-3070 or click here to learn more.