Oxford Dictionaries proclaimed the word “selfie” as its word of the year for 2013. I think that speaks volumes about where we are as a society, but that is beyond the scope of this article. In an attempt to turn a negative into a positive, I’d encourage all business owners to stop tweeting and updating their Facebook pages, and instead spend five minutes performing a business insurance selfie. The result of those five minutes could be significantly more rewarding than spending that time online looking at what others had for dinner the night before. Below is a list of five risk categories to get you on your way:
Item 1- Property Exposures– Do you have an office, carry inventory, own a building or have you signed a lease that might require you to pay for certain items should the location be damaged or destroyed? If your location evaporated overnight, would your business sustain a significant reduction in its ability to generate revenues? Do you routinely ship your goods or goods of others? If you answered yes to any of the above, you need to consider property insurance. If you already carry coverage, are your limits reflective of your current exposures?
Item 2- Business Liability- Do you sell a product or provide a service that could give rise to a lawsuit involving damage to another party’s property or bodily injury? (Quick Hint: The answer is “yes” for almost any business that is generating revenue.) In my career, I’ve encountered several people who have opined that they don’t carry liability insurance because that makes them a bigger potential target for lawsuits. I try to nod politely and resist the urge to leave the room. The truth is, you don’t have to do anything wrong to get sued, and purchasing liability insurance is a means of pre-paying for the cost of defending your business if and when this occurs. Further, should there actually be validity in the third party’s claim, insurance provides a potentially sizable pocket from which to pay what is deemed owed.
Item 3- Automobile Liability– Does your business own vehicles? Do any of your employees or 1099 contractors use their personal vehicles to run errands or conduct business on your behalf? Most businesses have at least a modicum of automobile exposure whether in the form of owned or non-owned autos. Making sure that your coverage would respond in both cases is essential to a solid risk management plan.
Item 4- Workers Compensation- The requirement for companies in Florida to carry coverage differs between construction and non-construction firms, but no matter what your company’s size or classification, the responsibility for an employer to take care of an injured worker remains the same. Don’t get caught in the common erroneous assumption that just because the state doesn’t require you to carry coverage, you are somehow absolved of responsibility in the event that your worker is injured or is the victim of an occupational disease. Put simply: You’re not.
Item 5- Contracts– No matter your industry, beware of the fine print in contracts and leases. Even the most basic of agreements can have far-reaching implications in terms of your responsibility to perform financially should things go awry. Review those contracts carefully, and enlist the help of your insurance agent and attorney if you have any questions.
Most firms don’t have the luxury of an on-staff risk manager or in-house counsel, so it falls to the business owner or CFO to routinely self-examine the potential risk pitfalls each business faces. The first step is identifying your risks. The next is to devise a risk management plan to address those risks, which should include insurance as well as solid risk mitigation strategies. Please consider contacting an experienced commercial insurance agent to help you through this important process. Now, with all that said, what did I miss on Facebook…