20 Dec 3 Common Areas Small Businesses Are Often Left Exposed – And What You Can Do to Get Them Covered Today
December 20, 2018
Post by Byars|Wright
By: Oliver Wright, Account Executive
Many employers believe that once they have a business owner’s policy in place, they no longer to need to worry about any other type of coverage for their business. While this may be the case for some small businesses, it’s definitely not the case for others. Even with some policies being required under state law, the required limits aren’t always where they need to be.
As a small business owner, it’s your responsibility to know that if something were to happen, you could not only recover, but still take care of your employees at the same time. Aside from the coverages that are on every policy with adequate limits, there are three areas where adding additional coverage can really help: Business Income, Commercial Umbrella, Worker’s Comp.
- Business Income Insurance, also called business interruption coverage. If for some reason a business couldn’t operate, this coverage would kick in and provide supplemental income to employees and the owner based on prior financials. Let’s say for instance a tornado destroys your building; this coverage would provide income for you and your employees until you were able to open the doors again.
While many businesses are underinsured in this area, when a disaster strikes, they’re forced to let some employees go. That’s why it’s so important to be aware and know that limit is where it needs to be. This can bring a business owner peace of mind, especially during trying times.
To minimize these risks: If you’re a business owner, I’d suggest working with your accountant to take a look at the financials in order to determine what that limit should be. At Byars|Wright, we’ll often help our clients do that.
- Commercial Umbrella Policy. This policy is simply excess liability coverage that sits on top of your current liability limits. If an accident occurred and a third party were to sue or bring a lawsuit, the general liability or auto liability would come in first; that would be your primary coverage. Then umbrella would trigger once the primary liability was exhausted. While no small business is 100% safe from a claim that could get into umbrella limits, it’s just that extra piece of coverage and protection.
To minimize these risks: There’s often no way to minimize the risks of an unforeseeable accident that could get into umbrella limits. We see tragic accidents happen all the time with small businesses that have company vehicles on the road. That’s why I can’t stress this extra liability coverage enough. Without umbrella coverage, once that liability limit is met and the money exhausted, it’s the owner’s responsibility to cover those remaining costs, and that’s not a good situation for anybody.
- Workers Compensation Coverage. Every business owner is responsible for making their workplace safe, but even with appropriate measures in place, there’s always a risk of having an accident that could leave an employee injured or sick.
While it’s true that state law requires employers with 5 or more employees to carry workers comp coverage, smaller businesses with less than 5 don’t often see the need. This is a scary situation because if an unfortunate event was to occur, the business owner would be held responsible for any associated costs.
Another problem that arises out of this is the fact that businesses with less than 5 employees typically have a closer employer-employee relationship. I’ve seen employees get hurt and have to file a lawsuit against the company, and of course, that close relationship tends to suffer from the unnecessary friction.
To minimize these risks: Along with having adequate coverage in place if something were to happen, regular safety meetings are a great way to minimize your risks for workplace incidents. At Byars|Wright, we even set up monthly or quarterly safety meetings with various clients in order to bring awareness to safe practices in the workplace.
Even if you think your business is fully covered, it never hurts to take a second look and ensure that all your policies and limits are exactly where they need to be. During unfortunate events, the last thing you need to be concerned with is having to let your valued employees go or paying out of your own pocket.
Byars|Wright is a locally owned and operated independent insurance agency with five offices in the greater Birmingham area – including Jasper, Gardendale, Homewood, Alabaster, and Cullman – that has developed into a major provider of commercial and personal insurance. Since 1946, the agency has expanded its scope of business and delivers a wide-range of insurance products with quality coverage at competitive prices. Byars|Wright has been designated a Best Practices Agency by the Independent Insurance Agents and Brokers of America and was also named “Best Companies to Work For in Alabama” by Business Alabama in 2016, 2017, 2018. 2019. We Build People, Protect Relationships. Byars|Wright is Where Relationships Matter.