Liability Insurance: What is NOT Covered

Most corporations opt for some form of liability insurance, and small businesses are no exception. But if you’re new to the world of risk management, the first question to ask yourself is: what exactly is liability insurance?

General liability insurance – often referred to as commercial insurance – is best described as coverage for damages that the insured becomes legally obligated to pay due to bodily injury, property damage or personal and advertising injury arising from the insured’s premises, operations, completed operations and products. Essentially, for both personal injury and property damage claims, you are covered for related legal fees, costs and expenses.

Important aspects of running a business that is covered by this type of insurance include:

  1. The cost of legal defense and any settlement or award should an owner be successfully sued;
  2. Protection against any liability an owner would face as a tenant of damaged rented property.

Some policies can also cover misleading advertising claims, including libel, slander, and copyright infringement.

So what is not covered in your liability insurance plan? Below is a general list of items that are not included in this type of insurance, but will vary by policy.

Employee medical expenses

  • Damage to property owned by the business
  • Vehicles or employees injured in a company vehicle
  • Any damage or injury that involves a person in the company

To summarize, damages to anything owned by the business are not covered; that’s why liability insurance is called a “third party” insurance.

Tips for Selecting the Best General Liability Insurance for Your Business

Understanding the potential risks to your business is a fundamental way to begin this process, because the plan you might need really depends on the type of business you own.

For example, a building contractor faces much higher risks of injury and actual damage to his or her business than, say, a web designer’s business—simply due to the kind of work involved.

Once you have recognized your own business needs, the next step is to fully read the coverage policies. It may seem obvious, but it’s crucial to understand what certain agencies are offering in order to choose the best policy for you.

Something else to consider is the Business Owner’s Policy (BOP), a package deal that most often includes property, general liability, vehicular, and business interruption protection. This option streamlines the process and may cost less than purchasing multiple coverages from different insurers. Again, however, if your business has unique demands that are not covered by an umbrella policy such as the BOP, you may need to invest in additional plans.

If you have any questions regarding liability insurance policies, don’t hesitate to contact a Cleary representative. We’re here to help you protect your business and narrow down the coverages that your company truly needs.

3 Risks that Keep Small Business Owners Up at Night

It’s not easy to run a small business. Business owners face a diverse range of risks—some business related, but also personal jeopardies such as debt and income loss if things go really wrong.

So what are the highest risks that commonly keep small business owners up at night? An article from Forbes provides some insight; it includes the results from a NFIB (National Federation of Independent Business) “Small Business Problems and Priorities Survey” conducted in 2016.

The top three concerns of small business owners, as derived from this survey, were as follows:

  1. The cost of healthcare
  2. Oppressive government regulations
  3. Federal income tax on businesses

You might notice a theme here. Interestingly, according to this study, nine of the top ten small business challenges are associated with government.

What’s the outlier that’s not government related, you ask? Finding qualified employees.

The cost of hiring new employees

Deciding who to hire is an important process for small business owners, but finding the right people is no easy feat. This is where making bad decisions comes into play.

According to a “Small Business, Big Hire” survey conducted in 2016 by Monster Worldwide, “nine-in-ten small business owners (89 percent) identify hiring the wrong person for a job as a risk to the company, with half (51 percent) saying it is a major risk.” Many issues can arise when an employee is not fit for a particular job, including product use errors or customer service mishaps, all leading to a negative impact on company productivity and reputation.

To make matters worse, when you hire the wrong person, you waste the organization’s time and money. One-third or more of these owners estimate wasting over 50 hours of their time and over $1,000 due to their most recent wrong hire.

The takeaway? You do have some power over who you choose to work with, which has a larger impact on how the business runs than some might think.

And even if you feel powerless against government regulations, there are a variety of support networks specifically designed for small business owners. Here’s a few of them that you should check out:

U.S. Small Business Administration (SBA)

Small Business United (SBU)

National Association of Women Business Owners (NAWBO)

National Small Business Association (NSBA)

At Cleary, we believe life is worth the risk. If you’d like to chat with someone about how to better manage your small business, email us here.

3 Types of Insurance Your Business May Not Need

Let’s face it; insurance agents aren’t normally in the business to tell you what types of a commercial insurance policy you don’t need.  In fact, many of our clients tell us that they often felt uncomfortable talking with former agents for fear they’d over sell them on coverage.

At Cleary Insurance, we’re all about risk management: determining where your risks are, and how to best mitigate them through several methods, one of which is carrying insurance.

So in this spirit, we’ve taken a look at some coverages that you should examine closely before jumping in. And if you ever need advice, just give us a call.

Cyber Liability Insurance

In the digital age, information has never been so accessible—and vulnerable. Online hackers threaten many businesses and companies, and Cyber Liability Insurance may provide protection against these types of attacks.

Commercial Insurance Policy_Keyboard

Heinan Landa, a contributing writer for the Boston Business Journal, highlights some alarming facts in one of his articles:

“According to the National Cyber Security Alliance, one-in five-small businesses falls victim to cybercrime each year, and of those businesses 60-percent will fold within six months of an attack.”

This threat and its detrimental effects are formidable, and certain precautions should definitely be pursued. However, is the danger sizeable enough to necessitate the investment of an entirely new insurance policy?

It all depends on the type of business in question (and the exact nature of information stored). For instance, if a business handles sensitive and private information, then owners might consider one of these cyber liability coverages.

Commercial Insurance Policy_Lock and Key

On the other hand, consider if your existing insurance can be formatted to cover your needs. If you do not handle customer data, then your Errors and Omissions policy may cover certain company claims.

It is crucial to double check obtained insurances to verify if further coverage is truly required. And as always, it is imperative to remain proactive: invest in secure servers, establish standard processes for passwords and file sharing, and educate employees about cyber-safety.

Employee Dishonesty Insurance

As much as business owners like to trust their employees, there’s always the chance of theft or other crimes. Employee Dishonesty Insurance serves to support owners against such occurrences.

Commercial Insurance Policy_Boardroom

The U.S. Chamber of Commerce provides some startling statistics on crime resulting from employee dishonesty:

“The median loss is around $140,000, and small businesses, those with less than 500 employees, suffer as much as $100,000 more in losses than larger companies. Employers only discover these losses an average of 10 percent of the time, and the losses that are discovered result in the employer regrouping nothing more than 40 percent of the time.”

It’s no wonder why small businesses in particular see a need for this type of insurance.

However, employee dishonesty is not offered in most commercial insurance policies and would be considered a secondary coverage. It’s all up to the owner; are there already measures put in place to monitor the activity of employees? Does the size of the business necessitate this extra insurance? If you are at all unsure, don’t hesitate to contact a Cleary agent to discuss the matter further.

Product Liability Insurance and other Industry-Specific Policies

Business owners who do not require Product Liability Insurance can easily avoid it. Product Liability Insurance applies to businesses that make, distribute, or sell a product, protecting you from any losses related to a product defect. Therefore, if an owner’s business does not function in this way, there’s no need to invest in this type of insurance.

There are other industry-specific policies that could be thrown in front of you, but easily avoided, such as Boiler and Machinery, Commercial Auto, and so on. It may seem simple enough, but contact one of our representatives if you feel like you’re signed up for more than you need.