If you own a small business you are exposed to numerous risks, including lawsuits by third parties, your own employees, and those you do business with. Damage to your business property or premises can be catastrophic without insurance to cover the losses.
As this year comes to an end and 2016 starts, there are a few insurance-related activities you can take to help mitigate the risks you face.
1. Review Your Liability Insurance Basics.
Are the premiums paid up? Are there any potential claims you need to report? Are the policy limits sufficient?
2. Review The Types Of Coverage You Have.
Do you need other types of coverage? If you have employees, you could probably benefit from employment practices liability insurance (often referenced as EPL insurance or EPLI). If your employees are engaged in substantial transportation activities for your business, do you need business auto coverage? Could you benefit from an umbrella policy that would potentially extend the scope of available coverage and increase the limits available to protect against larger losses?
3. Review Your Property And First-Party Insurance.
Is your business personal property adequately insured? Are you insuring inventories to the right level? Does your business hold products that are owned by third parties? If so, are you adequately insured against third party claims if something happens and causes the loss of or damage to their property? Do your employees handle money? Do you have fidelity insurance that protects you if an employee pilfers?
4. Review The Insurance Available Through Those You Do Business With.
If you enter into contracts or you pay other businesses to do work for you, you might need an indemnity agreement and you might want to require them to name you as an additional insured under their policies. Indemnity agreements can be used to shift the risk certain risks of damage or injurie to the entity you are doing business with. And by requiring them to name your company as an additional insured under their insurance policies, your business might be able to turn to their insurance company for coverage in the event of a loss or litigation.
If you already require additional insured coverage from those you interact with, now is a good time to verify that the coverage is in place. Call them to request current endorsements and certificates of insurance.
5. Review Your Personal Insurance Situation.
Is your automobile insurance enough to protect you if you blow through a stop sign and cause serious injury to two young medical doctors? Do you carry uninsured motorist that would protect you against physical injuries and resulting financial losses if an uninsured teenager blew through a stop sign and caused you to suffer a serious injury that kept you hospitalized and unable to conduct business?
And what if a fire destroyed your home? Could you adequately prove your losses to the insurance company? Do you have a recent videotape of your home and your possessions? That would help if you needed to submit a claim. You have to make sure the video is stored away from your home so that it isn’t damaged in the fire and will be available when you need it. When it comes to risk mitigation and insurance, an ounce of prevention will always be worth at least a full pound of cure. Unless you are that unusual type of business owner who stays up late at night pouring over insurance policies and the fine print on your business contracts, it is probably a good idea to schedule a meeting with your insurance broker, an insurance professional who can help make sure you have the bases covered. You can lose weight any time. This year, make calling your insurance broker and reviewing your insurance situation your New Year’s resolution.
ABOUT THE AUTHOR: David B. Ezra
David B. Ezra is a shareholder with the Berger Kahn law firm in Irvine. He has practiced insurance law in Orange County since 1990. He is often retained as a consultant or expert witness in connection with insurance-related disputes.
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