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5 Kinds of Insurance Coverage Business Owners Usually Miss

Every business has to keep an eye on costs. You carefully scrutinize every expense and cut or scale back wherever you can.

That’s smart, and you probably can cut back in many places. But there’s one area where business owners should look carefully to make sure they’re spending enough and maybe even boost their monthly investment.

Insurance isn’t the most exciting thing you spend money on, and its benefits aren’t immediately tangible. When you need it, however, you often realize it’s the most valuable thing you own.

If you have reduced costs at the expense of coverage, make sure you’re not missing these key policies that every business owner should consider.

1. Workers’ Comp – for yourself!
State laws require workers’ comp insurance for all businesses of a certain size, and those laws can differ depending on what kind of business you own. Many business owners make the mistake of excluding themselves to shave a few bucks off the monthly premium. Or they might be under the impression they’re covered under a major medical policy – which is not always the case. What happens if you as the owner get hurt, and you have lost income and medical bills to contend with? You’ll still need to draw a salary, and better it comes from your insurance policy than your operating costs.

2. Key Man
It’s a no-brainer to have death and disability insurance for a business owner so the company can continue if the unthinkable happens. Make sure you have other irreplaceable personnel covered too. “Key Man” can cover any number of invaluable people on your team. For example, if you own a software company and suddenly lose your lead engineer, how much revenue would your business lose? How much would it cost to find and hire a replacement? 

3. Cyber Liability
In today’s world where companies deal in customer data and personal information is stored everywhere, there’s no reason to take a risk on cyber security. If your company is the victim of a breach, you could be required to pay for credit monitoring for everyone affected. And then there are the lawsuits and recovering lost assets. Many policies these days cover up to $50,000 or so for cyber liability. That won’t go very far. Check your policy to see how much you could lose when disaster strikes.

4. Employee/Employer Related Issues
No one wants the headlines associated with harassment, discrimination or wrongful termination. Regardless of whether or not any allegations are true, they can cost you customers and lead to costly lawsuits. Employment practices liability coverage can help cover any legal costs and judgements made against you. Plus, most policies will provide a help line if you have a question on how to handle an employee/employer related issue. They can talk you through it prior to you taking any action.

5. Umbrella
Your current liability coverage can only go so far. With so many moving parts in your business and risks around every corner, an extra layer of coverage can be invaluable. Think about what a car accident or a product liability claim could do to your business. Is your current coverage enough to handle what your ultimate exposure may be? An umbrella policy could add an extra $1-10 million or more to use if in fact a large claim was made against the business.

Because business owners are so cost conscious, some insurance companies are in a race to the bottom just to offer the lowest monthly premiums. As the old adage says, “You get what you pay for.” Spending a few thousand a year on insurance can seem like a lot of expense for not a lot in return. But when disaster strikes, it will be the best money you ever spent.

What about personal coverage? Take a look a the five personal policies most people overlook
 

Ken Halliburton is the managing principal at Miller Loughry Beach Insurance Services, Inc., a subsidiary of Pinnacle Financial Partners. He can be reached at [email protected] or by calling (615) 849-4250.

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