In our 50-plus years in the Gainesville marketplace, our agency has been privileged to work with thousands of small businesses. From startups to well-established companies, small business clients make up the backbone of our agency’s book of business. That said, the risks these businesses face today are significantly different than those our clients faced 50 years ago (or in some cases, even five years ago). The purpose of this article is to discuss a few of the newer risks that all of our small business clients face to one degree or another.
RISK No 1 Risk Transfer
As the small fish in the economic pond, small businesses can be victimized by risk transfer strategies from the larger contractors, landlords, suppliers or distributors with whom they partner. Unfortunately, these exposures can go unnoticed until it is too late if small business owners do not have the time or experience to properly identify them. I see clients daily who are being asked to add other entities as additional insureds, waive subrogation and pronounce the coverage for these other entities as primary. Typically, these requests are made with the expectation that the small business will absorb the expense. While the language at first may seem innocuous and the expense appear to be a necessary cost of doing business, it is important to consult with your agent about the impact of these contractual requirements on your coverage should a loss actually occur. In many cases, upon educating our small business clients on what those requests mean, they have been successful in negotiating those requirements away or, in some cases, have decided not to do business with certain parties once they understood the implications behind these risk transfer strategies.
RISK No 2 Employees
No matter how many employees a business has, there is a risk inherent to hiring. The Workers’ Compensation statutes remain the same, by and large, as they’ve been for quite some time. But, the employment regulations and potential pitfalls are ever changing. Coverage is available to deal with many of these employment practice related risks, but vetting employment decisions and policies through a qualified employment attorney is always advisable as well. Further, the employment practice insurance forms are evolving quickly, so it remains important to stay abreast of the coverage options available to your company regardless of size.
RISK No 3 Cyber/
Privacy Exposures I have very few clients today who don’t do at least some business online. Whether it is a website that allows customers to transact business, a procedure that requires emailing sensitive information about a client or a web-based database that retains customer information, virtually all of us have an exposure related to the Internet. The traditional liability and property insurance forms have a long way to go to catch up with these exposures, and those business owners who simply renew their same coverage year after year may not have the coverage they need based on their evolving risk. Unfortunately, the frequency and sophistication of hackers, malware and other cyber-related exposures only seem to be increasing.
RISK No 4 Speed
The speed in which business is done has unquestionably accelerated in the last decade. A business owner used to have only face-to-face meetings and phone calls to keep track of in a typical business day. Now, while you’re on a web-based conference with a client or supplier, you receive multiple emails, texts, and voicemails from several others, each with a set of demands and specifics that require your attention. Until cloning technology allows us to duplicate ourselves, this increased speed can increase your risk. It is therefore important to have procedures and policies in place to make sure that a business does not take on an exposure unwittingly. This also means that rather than having the traditional “renewal” meeting with your agent where you only consider the price change in your insurance from the prior year, you need to make time to have more frequent discussions with your insurance professional so that he or she can stay in tune with the accelerating, unique exposures faced by your particular business. BRIAN SCARBOROUGH is a Principal at Scarborough Insurance, an independent agency that sells all lines of insurance and has been serving the community since 1961. Visit scarins.com for more information. The key to all of the above is to partner with an experienced agent who will devote the time to advise you of your options. And, while it may be tempting to devote yourself to maximizing revenue while hoping for the best, avoiding consideration of your business risk is not a sound long-term strategy.
BRIAN SCARBOROUGH is a Principal at Scarborough Insurance, an independent agency that sells all lines of insurance and has been serving the community since 1961. Visit scarins.com for more information.