Practical advice for protecting your small business, from the perspective of a personal injury trial lawyer

Insurance! Insurance! Insurance!

Insurance should be a close friend of your business. Not only does adequate insurance bring peace of mind by protecting the assets of your business and your family, it is also the right thing to do. Your business has no intention of hurting anyone or anything, but accidents and mistakes will happen. The risks of someone being hurt in furtherance of your business activities are actually much greater than you realize. Matters of liability and risk must be serious considerations in the management of your company. Insurance provides protection against these potential accidents and mistakes.

In all the excitement of starting and running your own business, thinking about obtaining insurance may not be a priority. Other startup matters may seem more important, and budgets can be tight. But, a little insurance goes a long way.

Here are some of the most common forms of business insurance that every business should consider.

 General Commercial Liability 

General Commercial Liability (“GCL”) insurance is something every single business shall obtain. I say “shall” obtain, because not having a GCL is not only extraordinarily risky, but potentially un-ethical.

While many believe their business operations would never result in the physical injury or death of another person, it can and does happen. In the terrible event that the operation of your business results in physical injury or death to another, you need to be properly insured.  Again, whether you sell coffee, mow lawns, create websites, or operate an accounting firm, every single business has some exposure to mistakes and accidents that can hurt people. Your company should be covered by a GCL. This type of insurance provides protections from legal claims and lawsuits arising from accidents, mistakes, injuries and claims of negligence. This policy can protect you and your company against settlements and verdicts against your company as the result of bodily injury, death, property damage, medical expenses, libel, slander, the cost of defending lawsuits.

Product Liability 

Companies that design, manufacture, wholesale, distribute, or retail a product may have “strict liability” for any defects, malfunctions or deficiencies of that product. This is true even if your company had no involvement whatsoever in the design or manufacture of the product and merely acted as the distributor. Product liability insurance protects against financial risks associated with a product defect that causes injury or bodily harm to another.

Professional Liability 

Businesses that provide professional services should consider having professional liability insurance (also known as “errors and omissions insurance”). Examples include attorney malpractice insurance, medical malpractice insurance, real estate agent insurance, and insurance coverage for professional engineers, architects, brokers, and construction contractors and so on. This type of liability coverage protects your business against malpractice, errors, and negligence in providing professional services to your customers.

Commercial Property 

Commercial Property Insurance covers losses and damage of your company’s property due to fire, smoke, wind, hail storms and a wide variety of events. The definition of “property” is normally broad, and can include lost income, business interruptions, buildings, computers, company papers and money.

Automotive 

If your company operates motor vehicles, trucks, or commercial vehicles, and even if your company is only using a personal vehicle for intermittent business use, your company will need automotive insurance. That includes everything from the local flower shop that delivers flowers, the accountant who pays personal visits, the website developer who visits her clients, and really any business that uses a motor vehicle in any aspect of its business. Just like insurance you obtain in the operation of personal motor vehicles, your business will need liability and property-damage coverage for the operation of motor vehicles in your business.  This kind of insurance is important because the risks of truck accidents and motor vehicle accidents are very high.

Workers Compensation

Depending on your state, your business may be required to carry worker’s compensation insurance for your employees. This insurance covers injuries to your business employees suffered during the course and scope of their employment with your business.

Home-Based Business

Hark! Homeowners’ insurance policies do not cover losses of a home-based business. Depending on risks to your business, you may look at adding a rider to your homeowners’ policy to cover business risks such as property damage.

Umbrella/Excess Policies

I am big fan of umbrella/excess insurance policies. These policies protect your business against liabilities over-and-above the underlying insurance coverage your company already possesses. It’s an “excess” or “extra” protection, and it is very cheap. Moreover, not only is it cheap, it provides enormous peace of mind.

Conclusion

Insurance, insurance, insurance! Your startup and small business needs insurance. Every business needs insurance. That is fact. If your company does not have insurance, you and your company are acting in a very risky manner.  To assess your company’s insurance needs, sit down with an agent, broker or lawyer to talk about your business. Accidents and mistakes will happen in the course of your business operations. Make sure your business is protected against these accidents and mistakes. It’s not only financially intelligent, but it is the responsible thing to do for your customers, employees and community.