By Mark Genovese
“Owning a small business comes with
risk and responsibility,” said Beth Sullivan,
commercial marketing manager at Jaeger &
Flynn Associates in Glens Falls. “It’s critical
that business owners protect themselves as
much as possible from financial damage.”
They can do this by purchasing insurance.
Several types of policies are available
and packages can be customized to meet an
individual business’ needs.
A small business owner needs to take
a thorough look at the risks and even
dangers – both physical and financial – to
customers, employees, and the business
itself, experts say.
“Each business has a unique set of requirements and limitations. Some may be more high-risk and need to purchase additional coverage,” said Rick Saunders of Dick Saunders State Farm Insurance in Glens Falls. “A business owner would generally want to provide liability coverage should an injury occur at their location.”
Depending on the business, they might also be interested in product coverage. “For example, a hair salon that shampoos customers might want coverage for an damage unintentionally caused by the products they use,” Saunders said. “A business could also consider coverage for completed operations.” An example of this would be if a carpet installer punctured a waterline while laying down nail strips. It wouldn’t be intended to cover shoddy workmanship, but damage discovered after work that has already been done. The insurance would cover the cost of the subsequent repairs.
“The cost of coverage is relative to the amount of risk associated with the business,” Sullivan said. “It’s important that business owners and managers be aware of what circumstances are not covered by their policies, and make informed decisions when deciding whether to purchase additional coverage or not if it’s available.”
“The insurance world is vast and can be somewhat intimidating,” Sullivan said. Businesses should consult with a licensed insurance agent or broker before deciding which type of policy is the right fit.
To start, New York state also requires workers compensation coverage and disability coverage. After providing for this, an insurance company’s underwriters will help a business owner consider several risk factors, such as location, building type, and fire protection. They should also consider the nature of the business, number of employees, and remuneration.
If the business is a tenant, it might not have a need to cover the building, but it may have made improvements in that it would be interested in protecting, Saunders said. It would also want protection for its fixtures, stock, samples, or furniture. A franchise may have an insurance package provided by the corporation.
A business should consider general liability insurance, which offers protection against legal damages typically caused by innocent oversights and mistakes made by the business owner or their employees, insurance agents say. An umbrella/excess liability coverage will help protect against any loss that might be attributed to a business, whether the claim is legitimate or not.
Additional specialty lines policies are important, depending on the nature of the business. For example: A business that primarily conducts its transactions over the internet — and therefore handles particularly sensitive information on clients — should consider cyber liability coverage. Errors and omissions coverage is required for professionals such as attorneys and medical professionals.
Directors and officers coverage, as well as employment practice liability coverage are becoming more prevalent due to workplace harassment and discrimination litigation, accoding to experts.
Pulling all of these factors together is a business owner’s policy package. This is a cost-efficient policy that offers property, general liability, vehicle, business interruption, and several other types of coverage that are specific to small businesses.
What a business owner is buying is essentially legal representation, for the insurance company’s legal division to defend them. “Liability insurance covers you when you are legally liable,” Saunders said. “The claim would be processed by the insurance company’s claim office, which would investigate the situation and make a determination.”
For example, perhaps a patron of a restaurant reports finding a foreign object in his food. The insurance company would investigate whether it was placed there by the patron in order to get money, or whether it was the result of a mechanical breakdown of its equipment.
“If the patron reported damages that required ongoing medical care, the claim office would look to make a reasonable offer to the patron, while minimizing the loss for the restaurant,” Saunders said. “If the injured patron says ‘no’ to the offer and his attorney sues, the matter would then be handled by the attorney for the insurance company and the claims office.”
Insurance agents can help out in other ways. They can be involved as a consultant in reviewing the business plan, financials, and risk assessment to assess the likelihood of claims. Agents can pre-qualify a business and have the expertise to determine which insurance company would work the best, based on the businesses’ particulars. An independent agency can pull policies from several insurance carriers in order to tailor a specific package. Policies can include property, casualty, and liability insurance.
“Agents are competent in reading and explaining insurance policies, so clients won’t need a law degree to understand what’s covered,” Sullivan said. They can spot gaps in coverage, such as co-insurance clauses and no-business interruption coverage. “Gaps like these can put a business out of business.”
For more information on Jaeger & Flynn Associates call 373-0069, or visit its website at www.jaegerflynn.com. For more information on Dick Saunders State Farm Insurance, call 793-3841, or visit its website at www.dicksaunders.com.