Protecting Your Business With Insurance

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Confused about what type of insurance you need for your business?

We get it, insurance can be confusing and boring. You’re at that stage of your business where you’re ready to get running.  But before you go full speed ahead, don’t overlook insurance!

Having the right insurance will help protect you, your business, your employees, and your property.   Unfortunately, there are so many different policies, and its so hard to know what is covered, or more importantly, not covered, by each.  

 

To start, here is a list of the most common types of insurance for a business

  1. Commercial property
  2. General liability
  3. Workers compensation
  4. Errors and omissions/Professional liability
  5. Cyber liability
  6. Commercial auto
  7. Employment practices liability

 

Commercial Property Insurance

Natural Disasters! Theft! Fire! Building Collapse! Oh My! The list goes on….

Whether you own a commercial or rent a commercial space, or even if you have a home office, commercial property insurance is necessary.  This type of insurance covers damage to the physical property you work out of and the tangible property you use in your business every day, like computers, inventory, tools, etc. 

Not only can it cover the cost to replace or repair damaged property, but it can also provide coverage for lost profits if your business had to shut down because of certain events, like loss of utilities or other property damage.  In fact, if your business relies heavily on goods or services from one supplier, you may even be able to get coverage for lost profits caused by the shutdown of your supplier

General Liability Insurance

All businesses face the risk of claims or litigation.  When that happens, the costs can be overwhelming.  You need general liability insurance to protect against potential claims from customers, clients, or other parties you encounter.

Here are a few of the most common examples:

Bodily injury:  If someone is injured in your place of business or because of your work, your general liability policy could provide you with a defense of any claim and payment of a settlement or a judgment against you.

Property damage to a customer or third-party:  You may be legally responsible if a person’s or customer’s property is damaged while at your business location or because of your work.  A general liability policy could cover the costs to repair or replace the damage, as well as defend you against a lawsuit.

Copyright infringement: If someone accuses you of using a copyrighted or otherwise protected work in your business without their permission, you may be liable for damages.  A general liability policy should include advertising injury coverage to protect you in this situation.

Defamation: “If you don’t have anything nice to say…”  Someone can file a claim against you or your business if you say something in the news or on social media about another business or individual that causes them damage.  Even if what you said is true or not otherwise defamatory, you could still have to defend a lawsuit.  Advertising injury coverage may protect you

Workers Compensation Insurance

Not only is having workers compensation insurance the right thing to do, it’s also the law.  In both New York and New Jersey, if your business has any employees, it must provide workers compensation insurance.  More importantly, it helps to make sure that your employees have access to funds and medical care if they get injured while working.  Also, if you have adequate workers compensation insurance, then, generally, your injured employee cannot sue your company for damages from an injury.  Without it, the medical expenses associated with even one major workers’ compensation claim could cause irreparable financial harm to your business.  It also pays an attorney to represent your business against a claim.

Errors and Omissions/Professional Liability Insurance

We all mess up.  Or maybe you have an unhappy client who claims you messed up?  Claims by clients alleging you were negligent in the performance of your work or breached your contract are not covered under general liability insurance policies.  For that, you need an errors and omissions policy (“E&O)” a/k/a professional liability insurance.  Although many regulated professions, such as attorneys, are required to have this type of policy, it is almost always overlooked by small businesses.  It not only pays for your defense of claims, it can also cover settlement payments or pay judgments against you.

Cyber Liability Insurance

It’s a new world, and with it, new threats.  The number of businesses whose data has been breached or held hostage is skyrocketing.  If you have sensitive data of your clients, then not only will you suffer the damages of your own lost data, but you are also liable for claims by your clients.  Some states may even impose fines depending on how you handled your data.  Cyber liability insurance is available to not only cover the costs associated with the breach of your own data (like data recovery, credit monitory, ransom), but it can also cover the cost to defend and pay claims brought by clients.

Commercial Auto Insurance

Have you read your car insurance’s fine print?  Sure, you have insurance on your personal car.  And you only use it for work when you’re driving to events or making deliveries, so you think your covered.  Wrong.  Standard policies to cover your personal auto exclude coverage for any accidents that happen while your car is being used for a commercial purpose.  And since insurers are always looking for a way out, you know they will apply the broadest possible definition to commercial purpose.  Having a commercial auto insurance policy makes sure you’re protected no matter what you’re using your car for.

Employment Practices Liability Insurance

Employees can be the life blood of a business.  They can also be a major liability.  It is critical to have policies and training in place to prevent issues from arising.  Buts its helpful to have additional protection in case an employee makes a claim against you.  Employment practices liability insurance (“EPLI”) covers a variety of claims often brought by employees, such has discrimination, harassment, and wrongful termination. 

 

Summary

Starting and running a business can be overwhelming.  Insurance is something you should not overlook.  Talk to a friend or another business owner about their experience. Ask them if they have a broker they’d recommend. We always suggest talking to a broker rather than filing for insurance online by yourself. This way you can fully explain what your business does, and how you operate. The right broker should provide guidance on which type of insurance you should have to protect your business.  

Disclaimer:

Information contained in this post is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the with Michael H. Ansell, Esq., or other competent legal counsel.

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Picture of Michael Ansell, Esq.

Michael Ansell, Esq.

Michael Ansell is the founder and managing member of NextGen Counsel LLC. Throughout his years in practice, Michael focused on a variety of areas that impact small businesses, including contracts, employment, commercial leasing, corporate governance, construction, and general litigation.

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