Knowing When to Update Your Business Insurance Coverage

In the ever-evolving landscape of business, insurance coverage isn’t just a necessity—it’s a dynamic tool that safeguards your enterprise against unforeseen risks and liabilities. However, many business owners overlook the importance of regularly reviewing and updating their insurance policies, potentially leaving their operations vulnerable to new threats. Identifying the right moments to update your business insurance can make a significant difference in your company’s resilience and financial health.

Regulatory Changes

One of the most clear-cut indicators that it’s time to update your business insurance is a change in laws or regulations that affect your industry. Governments frequently update regulations to address new risks or societal changes, such as data protection laws for online businesses. An insurance policy that was compliant a year ago might not provide adequate coverage under new laws, exposing your business to fines or lawsuits.

Business Expansion

Growth is a goal for many businesses, but with expansion comes new risks. Whether you’re increasing your workforce, launching new products, or entering new markets, each of these milestones necessitates a review of your current insurance coverage. For instance, expanding into a new state or country might require additional forms of insurance due to different legal requirements. Similarly, introducing a new product line could expose your business to new liability risks that your current policy doesn’t cover.

Changes in Revenue

Significant fluctuations in your business’s revenue can also be a signal to reevaluate your insurance needs. Higher revenue levels can increase your liability exposure, necessitating higher coverage limits to protect against potential claims. Conversely, if your business is facing a downturn, you might need to adjust your policies to reflect your current operational size and risk profile, potentially reducing premiums.

Technological Advancements

The rapid pace of technological innovation can quickly render an existing insurance policy outdated. For example, businesses that have recently digitized their operations may need to consider cyber liability insurance to protect against data breaches or cyber-attacks. Similarly, companies utilizing new technologies or machinery might require updated property insurance to cover these assets adequately.

Natural Disasters and Climate Change

The increasing frequency and severity of natural disasters due to climate change mean that businesses must regularly assess their insurance coverage for natural catastrophes. If your business is located in an area prone to floods, hurricanes, wildfires, or other natural disasters, it’s critical to ensure that your insurance policy reflects the heightened risk level and provides sufficient coverage for such events.

Changes in Ownership or Management

Transitions in ownership or significant changes in management can impact the direction and operations of a business. These changes often bring new strategies, operational practices, and risk profiles, necessitating a review of the existing insurance coverage to ensure it aligns with the new management’s vision and the company’s updated risk landscape.

Regular Annual Reviews

Even if none of the above changes have occurred, it’s wise to conduct an annual insurance review. This practice ensures that your coverage remains aligned with your business’s current state and future goals. Regular reviews also provide an opportunity to explore cost-saving options, like bundling policies or adjusting deductibles.

Insurance is not a set-it-and-forget-it component of your business. It’s an essential tool that must evolve alongside your company. By staying vigilant and understanding when to update your business insurance coverage, you can protect your enterprise against emerging risks and ensure its long-term sustainability. Regular consultations with your insurance provider can help you navigate these changes smoothly and keep your coverage in line with your business’s needs.

 

The Importance of Commercial Umbrella Insurance for Business Protection

In today’s litigious society, where multimillion-dollar lawsuits can arise from simple accidents or unforeseen events, businesses must ensure they have adequate protection beyond standard liability policies. This is where commercial umbrella insurance steps in, offering an additional layer of security that can be crucial for a business’s survival. Here’s why every business should consider adding commercial umbrella insurance to their risk management strategy:

  1. Extended Coverage Limits

What It Offers: Commercial umbrella insurance provides additional coverage when the limits of your underlying liability policies (like general liability, auto liability, and employers’ liability) are exhausted. For example, if a lawsuit costs $2 million to settle and your general liability covers only $1.5 million, your umbrella policy can cover the additional $500,000, thus protecting your business assets from being used to cover the shortfall.

Why It’s Important: Businesses often face risks that can result in claims exceeding standard policy limits. Umbrella insurance acts as a safety net, ensuring that a business isn’t crippled financially by a single incident. This is especially important in high-risk industries or those prone to large liability claims.

  1. Broader Coverage

What It Offers: Besides providing higher limits, commercial umbrella insurance sometimes covers claims that are not included in primary liability policies. This can include certain legal fees, contractual liabilities, and liabilities over business practices that may not be typically covered under standard policies.

Why It’s Important: The broad nature of coverage under umbrella insurance means that businesses can be protected against unforeseen gaps in their primary insurance policies. This comprehensive coverage is vital for peace of mind and continuous business operations, particularly in dynamic environments where unexpected legal challenges can arise.

  1. Cost-Effectiveness

What It Offers: Commercial umbrella insurance is generally cost-effective, especially compared to the increase in limits it provides. Premiums are relatively low because the umbrella policy only kicks in after the primary insurance limits are reached, which makes it a less frequently used policy.

Why It’s Important: For a relatively small additional cost, businesses can significantly increase their liability coverage. This makes commercial umbrella insurance an efficient way to boost total coverage without proportionately increasing insurance costs, providing substantial financial protection relative to the investment.

  1. Reputation Protection

What It Offers: By ensuring that claims can be settled fully and promptly, umbrella insurance helps in protecting a business’s reputation. Handling claims efficiently prevents negative publicity and maintains customer trust.

Why It’s Important: A business’s reputation is one of its most valuable assets. In the event of a large claim, having the financial backing to resolve issues swiftly and fully can help avert potential reputation damage, which can be costly and difficult to recover from.

  1. Peace of Mind

What It Offers: With umbrella insurance, business owners can have peace of mind knowing they are protected against catastrophic losses that could potentially bankrupt their operations.

Why It’s Important: Running a business involves managing daily risks. With the protection of an umbrella policy, business owners can focus more on growth and less on the potential for devastating financial implications from lawsuits.

Commercial umbrella insurance is an essential component of a comprehensive business insurance strategy. It not only extends the limits of existing liability coverages but also ensures broader protection, making it an indispensable safeguard for businesses aiming to secure their future against the uncertainties of high-cost liabilities.

Is My Business Covered?

According to the latest surveys by major insurers, small to medium sized businesses have a number of critical gaps in their insurance coverage. The reasons for gaps vary; not fully understanding how certain coverage applies to their business, buying insurance from a captive agent who can’t provide the coverage, thinking their commercial coverage provides the coverage, and finally believing they don’t have the risk.

Here are the coverage’s you should consider to make sure you are adequately protected.

Pollution Liability– Protects against the liability that comes with polluting the environment including restoration and cleanup, liability for injuries and deaths caused by pollution.

Cyber Liability- Cyber liability is the risk posed by conducting business over the Internet, over other networks or using electronic storage technology. It covers third party losses from hackers, theft, and loss of information including sensitive client or individual personal information.

Directors & Officers Liability– Covers costs, damages, and defense protection to directors and officers of a company resulting from law suits and judgments arising out of poor management decisions, employee dismissals, shareholder grievances, and other such acts committed in good faith.

Employment Liability- Employment Liability provides protection for an employer against claims made by employees, former employees, or potential employees. It can cover discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations.

Professional Liability– Insurance that is designed to cover third party claims, damages and claims arising out of providing professional advice.  Many firms create legal obligations arising out of a professional’s errors, negligent acts, or omissions during the course of providing services to clients.

We are ready to help you better understand your risks. Please call our office today.

 

 

The Keys to a Business Continuation Plan

The Keys to a Business Continuation Plan

Businesses face an array of challenges in today’s ever-changing world. Disasters, economic downturns, and unexpected events can threaten the very existence of a company. A well-thought-out business continuation plan is the key to ensuring the resilience and survival of your business. In this article, we will explore the essential elements of a business continuation plan and why it is crucial for long-term success.

Comprehensive Risk Assessment

The first and most critical step in creating a business continuation plan is to conduct a comprehensive risk assessment. This process involves identifying potential threats to your business, such as natural disasters, economic downturns, cybersecurity breaches, supply chain disruptions, and even sudden leadership changes. Once you’ve identified these risks, you can prioritize them and determine their potential impact on your business. Understanding these risks is the foundation for building a robust plan.

Clearly Defined Objectives

A business continuation plan should have clear and specific objectives. It should outline what your organization aims to achieve during a disruption. These objectives may include minimizing financial losses, ensuring the safety of employees and customers, and maintaining customer service or product delivery. Having well-defined objectives helps keep everyone on the same page and ensures that your response efforts align with your long-term goals.

Communication Strategy

Effective communication is a critical aspect of any business continuation plan. Your plan should clearly outline how you will communicate with employees, customers, suppliers, and other stakeholders during a crisis. This includes the use of various communication channels, such as emails, phone calls, social media, and, if necessary, press releases. The speed and accuracy of your communication can significantly impact the perception of your business’s competence during a crisis.

Leadership and Decision-Making

A successful business continuation plan should designate key individuals responsible for decision-making during a crisis. This includes defining leadership roles, responsibilities, and the chain of command. It’s vital to ensure that those responsible for making critical decisions are well-prepared and have the authority to act swiftly. A clear hierarchy and decision-making process will prevent confusion and expedite responses.

Resource Allocation

Your plan must include details on how resources will be allocated during a disruption. This covers everything from human resources to financial assets. Consider how you will ensure access to essential supplies, technology, and facilities, as well as the welfare of employees and their families. By having a resource allocation strategy in place, you can prevent bottlenecks and efficiently use available resources.

Continuity of Operations

Business continuation planning is not just about responding to a crisis but also ensuring the continuous operation of your business. Your plan should address how you will maintain essential business functions during the disruption. This may include relocating operations, implementing remote work arrangements, or outsourcing critical tasks. The goal is to minimize downtime and maintain productivity as much as possible.

Testing and Training

Creating a plan is not enough; it must be regularly tested and updated to remain effective. Conducting drills, training sessions, and simulation exercises will help your team become familiar with the plan and improve response times. Regular testing allows you to identify weaknesses and make necessary improvements to your business continuation plan.

Regulatory and Compliance Considerations

In many industries, there are specific regulations and compliance requirements that businesses must adhere to during a crisis. Your plan should address these obligations, including reporting, documentation, and any specific procedures mandated by industry regulations. Failure to comply with these requirements can lead to legal issues or fines.

A well-structured business continuation plan is the lifeline that keeps your business afloat during challenging times. It provides a framework for handling disruptions, mitigating risks, and ensuring the long-term survival of your organization. By conducting a thorough risk assessment, defining clear objectives, implementing effective communication, and addressing all the key elements mentioned above, your business can build a strong and resilient foundation for success, even in the face of adversity. Remember, a plan is only as good as its execution, so continuously refine and update your business continuation plan to adapt to changing circumstances and emerging threats.

Who Needs Commercial Property Insurance

 

Commercial property insurance is essential for a wide range of businesses and property owners. It provides protection for physical assets and property used in the operation of a business. Here are some entities that typically need commercial property insurance:

Business Owners: Any business, whether it’s a small startup, a retail store, a restaurant, or a large corporation, can benefit from commercial property insurance. It helps cover the cost of repairing or replacing physical assets such as buildings, equipment, inventory, and furnishings in case of damage or loss due to events like fire, vandalism, theft, and more.

Property Owners: Owners of commercial real estate, including office buildings, warehouses, retail spaces, and industrial facilities, require commercial property insurance to protect their investments from potential risks.

Landlords: If you lease or rent out commercial space to other businesses, having commercial property insurance can help protect you from liabilities arising due to property damage. It can also cover lost rental income if the property becomes uninhabitable due to a covered event.

Manufacturers: Businesses involved in manufacturing rely heavily on specialized equipment and machinery. Commercial property insurance can help cover the cost of repairing or replacing these assets in case of damage or breakdown.

Retailers: Retail businesses have valuable inventory, fixtures, and equipment that are critical to their operations. Commercial property insurance safeguards these assets against various perils.

Restaurants and Hospitality Businesses: Restaurants, hotels, and other hospitality businesses have unique assets like kitchen equipment, furnishings, and decor. Commercial property insurance can help them recover from events that could damage these assets.

Medical Practices and Clinics: Healthcare facilities often house expensive medical equipment and technology. Commercial property insurance can provide coverage for these assets in case of damage or loss.

Professional Offices: Businesses like law firms, accounting firms, and consulting companies might not have a lot of physical inventory, but they have valuable equipment and documents. Commercial property insurance can help protect these assets.

Technology Companies: Tech companies rely on computers, servers, and other specialized equipment. Commercial property insurance can cover the cost of repairing or replacing these assets in the event of damage or loss.

Nonprofits and Organizations: Even nonprofit organizations often have physical assets like office space, equipment, and supplies. Commercial property insurance can be important to protect their resources.

It’s important to note that the specific coverage needs of each business may vary based on factors such as the type of business, location, industry, and the value of assets. It’s recommended to consult with an insurance professional to determine the appropriate level of coverage for your specific situation.

General Liability Insurance vs. Professional Liability Insurance: Do You Need Both?

As a business owner, you understand the importance of protecting your company from unexpected events. One of the ways to do this is by purchasing insurance. However, with so many types of coverage available, it can be challenging to determine which policies are necessary for your business. In particular, you may be wondering whether you need commercial general liability insurance, professional liability insurance, or both. In this blog post, we will explore the differences between these two types of coverage and help you determine whether you need both.

What is Commercial General Liability Insurance?

Commercial general liability insurance, also known as CGL insurance, is a policy that protects your business against claims of bodily injury or property damage caused by your products or services. This policy can cover expenses related to legal fees, settlements, and judgments if a third party sues your business for damages.

For example, if a customer slips and falls in your store and they sue your business for medical expenses, commercial general liability insurance can cover those costs.

What is Professional Liability Insurance?

Professional liability insurance, also known as errors and omissions insurance (E&O insurance), is a policy that protects your business against claims of negligence or errors related to the professional services or advice you provide. This type of coverage is essential for businesses that provide services such as consulting, construction, accounting, or legal services. Any business that provides advice to clients needs professional liability insurance.

For example, if a client sues your business for financial damages resulting from your professional advice, professional liability insurance can cover the costs of the lawsuit.

Do You Need Both?

Whether you need both commercial general liability insurance and professional liability insurance depends on the nature of your business. If you provide professional services to clients, you should consider purchasing professional liability insurance. This policy can protect your business against claims of negligence or errors related to your professional services, which are not covered by commercial general liability insurance.

However, even if you don’t provide professional services, you may still benefit from having both types of insurance. Commercial general liability insurance can protect your business against claims of bodily injury or property damage caused by your products or services. This type of coverage is essential for businesses that sell products or operate in a physical location, such as a retail store or restaurant.

In some cases, you may be required to purchase both types of insurance by law or contract. For example, if you rent commercial property, your landlord may require you to carry both commercial general liability insurance and professional liability insurance.

Commercial general liability insurance and professional liability insurance are two essential types of coverage that can protect your business against unexpected events. While professional liability insurance is essential for businesses that provide professional services, commercial general liability insurance is necessary for all businesses that sell products or operate in a physical location. Ultimately, the decision of whether you need both types of insurance depends on the nature of your business and your specific risks. Speak with an insurance agent or broker to determine the best coverage for your business.

Personal service combined with depth of knowledge in the insurance marketplace, and access to a wide range of carriers is the combination of factors that sets Oakwood Insurance apart from its competitors. We not only work in the north metro, but it’s also our home. We strive to support the vibrancy and growth of this community. We want it to thrive, and we want you to thrive. We will review your insurance coverage and help you understand what you have and ensure that it’s the best fit for your goals.

Product Liability Insurance

If you are in the business of designing, manufacturing, selling, and distributing a product, you understand that it can be exciting, involve hard work, and can even be a bit risky. When the product you represent causes injury or damage to a third party, you need and deserve protection. Depending on the coverage you have, you may not be adequately protected from a product liability claim. Many “standard” insurance policies have limitations for product liability claims. For example, a contractor installed windows in a custom home and 9 months later the windows leaked, causing thousands of dollars of damage. The window manufacturer said their windows are fine; it was the installation that was done incorrectly. The contractor may be held responsible for the damage. Product liability insurance would provide protection in this case.

Our experienced staff will work with you to help find the right insurance and risk solutions for your business. Our knowledgeable team can work with any business; we know and understand your industry.

What is product liability insurance?

Product liability insurance can provide protection from damages, claims, and other liability arising out of the selling, distributing, manufacturing, and design of products. Damages can include bodily injury, property damage, and even death.

An important feature of product liability insurance is legal defense coverage. The cost to defend an allegation can create a strain on your firm’s resources.

Claims can come from any of the following:

  • Poor workmanship
  • Breach of warranty
  • Failure to warn
  • Defect in design or manufacturing
  • Material defect
  • Failure to provide adequate instructions

Classes of businesses we work with:

  • Contractors
  • Artisan Contractors
  • Manufacturing
  • Restaurants
  • Distributors
  • Food Processors
  • Wood Products
  • Automotive
  • Sporting Goods
  • And More

We have a number of highly-rated insurance companies to select from. Call us today for more information.Personal service combined with depth of knowledge in the insurance marketplace, and access to a wide range of carriers is the combination of factors that sets Oakwood Insurance apart from its competitors. We not only work in the north metro, but it’s also our home. We strive to support the vibrancy and growth of this community. We want it to thrive, and we want you to thrive. We will review your insurance coverage and help you understand what you have and ensure that it’s the best fit for your goals.

2023 Commercial Insurance Outlook

Many businesses have experienced profit reductions due to economic pressures over the past few years. The pandemic and the supply chain problem have exacerbated this unpredictability. Having the right kind of commercial insurance is one method to keep financial losses and risks under control. Business owners and risk managers must thoroughly evaluate their insurance and risk management program in 2023.

Forecast for Commercial Lines in 2023

The market for property and casualty insurance and risk management is expanding as company risks rise. The huge vaccine rollout helped to contain the pandemic after its peak in 2022, but there is still a chance of new outbreaks. There are many excellent insurers ready to help you manage your risk in 2023.

Companies that provide insurance for business risks make up the commercial lines industry. The two primary categories of commercial lines are general liability and commercial property insurance. But others can include cyber, employment, earthquake, directors and officers liability, and more. AM Best, a rating organization, reported that the pandemic’s influence on commercial lines had decreased in late 2022. Even in 2023, the government issued a warning about potential obstacles that could fuel more litigation and inflation. The rating agency described the commercial lines market outlook as “stable” on average.

Since the fourth quarter of 2020, in 2023, it is less expected that interest rates will rise at the same rate they did a few years ago. However, insurance businesses will probably continue to expand their needs due to rising business risks even as rates flatten as a result of more market competition. Due to rising cyber threats, the market for cyber liability insurance is anticipated to expand. The supply chain issues will continue well into 2023.

Consumers of commercial insurance can obtain affordable rates by engaging with brokers who have developed connections with reliable insurance underwriters. Giving customers advice on lowering their risks promotes trust, renewals, and fewer claims. Using an agent that understands your risk is the best way to obtain the best possible combination of coverage and price.

2023 Casualty Renewal Strategy

The US commercial insurance market has seen an increase in underwriting capital of over $150 million since 2020. Get to the market early and have a well-established risk management program. Be able to show underwriters how your risk is the one they should select out of the hundreds they will review over the year.

What Kind of Businesses Need Professional Liability Insurance?

If you’re a business owner, you spend most of your time thinking about how to grow your business. But it’s easy to remember one of the fundamental building blocks: professional liability insurance. What is it? Why do you need it? And what does it cover?

Why Does Your Business Professional Liability Insurance?

  • You may be sued.
  • You may be held responsible for your actions or the actions of someone who works for you.
  • If you give advice to customers, you might be sued.
  • You may be held responsible for the actions of other people on your property or in your building/office space. 

What Does Professional Liability Insurance Cover?

Professional Liability Insurance can help protect you against claims of negligence. It covers legal costs in the event that a lawsuit is brought against you and can even cover damages or injury to third parties. It also helps pay for legal fees, and it will pay for your defense if you are found not guilty of any charges. Professional liability insurance can cover the costs of lawsuits over:

  • Work errors or oversights
  • Undelivered services
  • Missed deadlines
  • Budget overruns
  • Incomplete work
  • Breach of contract
  • Accusations of negligence 

Who Needs Professional Liability Insurance?

Professional Liability Insurance protects professionals from claims and lawsuits. If your advice or work injures someone, or if they believe their property has been damaged by something you did, a claim can be made against you. Professional liability insurance helps protect you from these claims and ensures that your business stays protected. Firms like these should have professional liability insurance.

  • Accountants
  • Lawyers
  • Contractors
  • Consulting agencies
  • Real estate firms
  • Architects, designers, and engineers
  • Real estate brokers
  • Financial consultants
  • Accountants and bookkeepers
  • IT professionals and programmers
  • Marketing and advertising professionals

 Conclusion

When you’re starting a business or running a current business, it can be tempting to focus on marketing and sales. However, there are many other aspects of the business that you should be equally concerned about. Professional liability insurance is one of those aspects that need careful consideration because it will protect your business against lawsuits and claims of negligence.

Your Private Business Is Exposed to Directors and Officers Claims

 

Directors and Officers (D & O) Liability Update

Every business, no matter what the size, has a D & O exposure.  Some people may mistakenly think that D & O risks are just for large firms, but actual court cases tell a different story.  D & O claims come about because of decisions made by the firm’s officers and employees.  Claims can come from employees, competitors, investors, and the government.  Most of these kinds of claims are not covered under a standard commercial insurance policy.

Here are some interesting facts brought to you by the Insurance Information Institute:

  • Over 53% of privately held firms have had D & O related claims.
  • Twenty-five percent of companies have had an employment related claim.
  • The average defense cost for a D & O claim is around $75,000.
  • Firms with less than 50 employees have the same percentage of claims as larger firms.

Here are some of the kinds of claims to which your business is exposed:

Misrepresentation

If you misrepresent your company’s services, financials or other information, third parties may sue you for your actions.  This can include services you say you provide on your webpage or financial information you provide to a lender.

Breach of Duty

Your firm’s officers and employees are required to carry out their duties with a standard of honesty and professionalism.  If these legal duties are breached, you are subject to litigation by the injured party.

Employment Issues

Your employees can sue the business for a variety of employment issues that can be covered under a D & O or employment practices liability policy.