You have worked hard to build and grow a successful business, only to have a sudden and unexpected event disrupt your operations and threaten a financial loss or, worse, bring your business to an end. Thankfully, you have that insurance policy to cover your losses…but will it actually do so?
Your business faces myriad risks, many of which are typically transferred to others through the purchase of insurance. Some of the more common types of insurance coverage include general liability, property and casualty, and commercial automobile, and most businesses have those. General liability covers damages by your employees, products or services to third parties; property and casualty covers damage to your buildings or property; and commercial automobile covers damage to your vehicle fleet. These will often be bundled together with some form of business interruption coverage to provide a cost-effective way of reducing these typical risks of loss.
But what about an equally prevalent, yet often overlooked, risk that exists today: errors and omission? Errors and omissions insurance (E&O) has been around for years and usually covers damages related to the improper rendering of professional services. However, E&O may also be applicable in situations in which a product you supply to a third party fails and causes loss of business to that party. Such a risk might not be covered by your general liability policy, as there might not have been any property damage or physical injury, but it would likely be covered with a properly endorsed manufacturer’s E&O policy.
Businesses are also facing a newer risk associated with their online presence and the security of their data. The use of websites to capture and disseminate information and the increasing connectivity with suppliers and customers in a real-time world bring with them great security challenges. Breaches of security can be catastrophic to your business. Fortunately, cyber liability and data breach insurance is available to help mitigate that risk.
There are many possible business risks and an equal number of types of insurance policies available to cover those risks. The key is to assess the risks of loss associated with your business, in your industry and in your environment, and then choose the types and amounts of coverage that best match your level of risk aversion and your budget. While it is impossible to predict loss events with any certainty, assessing your business risks and obtaining the right types of insurance coverage before an event occurs will help you sleep at night and could someday save your bottom line – or your business.
Michael A. Coakley can be reached at Email or 215.441.4600.