Study Shows Majority of Boston Area Small Businesses Are Overexposed to Risk

56-percent of companies failed a business risk assessment, operating without basic safeguards against damage caused by cyber-attacks, HR issues and other common operational realities

This past summer, we conducted a study to see just how aware Boston area small business owners are of their overall insurance coverage. This was the first study of its kind; we call it the Cleary Small Business Risk Index.

The results were scary.

The Index shows that more than half (55%) of Boston area businesses failed a risk assessment that probed 19 areas of risk management including cyber security, professional liability, employment practices and more.

So what does this boil down to?

“This proved what we have always assumed – most business owners don’t understand how to properly assess or account for risk,” said Bill Cleary, president, Cleary Insurance. “The answer isn’t always ‘more insurance.’  There are many ways to offload, avoid or manage risk. But in order to succeed, you need to understand the basic situation, and too many business owners just don’t.”

The Boston-area wide survey (including businesses on the North Shore, South Shore and Metrowest) was conducted online questioning 100 business owners, operators and employees spanning a variety of industries including healthcare, retail, financial services, and more.  All respondents had a significant influence on the operational decisions of each company.

Could you pass? Take the Cleary Small Business Risk Assessment today to test your understanding of coverage.  Also, check back for the next few posts which outline and answer some of the greatest areas for risk.

Is Your Business Prepared for a Natural Disaster?

While all businesses should have a plan in place to protect their employees and their bottom line when a natural disaster hits, they should also consider their location and the insurance that is necessary to keep their doors open after a catastrophic event.

For a detailed disaster plan you can visit  the link:  https://www.fema.gov/pdf/library/bizindst.pdf

Reviewing the insurance plan:

Businesses should review their insurance plan to reduce out of pocket expenses.  Make sure you have significant coverage to pay for the indirect costs of the disaster, disruption to your business and the cost to repair or rebuild your premises.  Most policies do not cover flood or earthquake damage and you may need to buy separate insurance for these perils. Be sure you understand your policy deductibles and limits.  New additions or improvements should also be reflected in your policy. This includes construction improvement to a property and the addition of new equipment.

For a business, the costs of a disaster can extend beyond the physical damage to the premises, equipment, furniture and other business property. There’s the potential loss of income while the premises are unusable. Your policy should include business interruption insurance and extra expense insurance. Even if your basic policy covers expenses and loss of net business income, it may not cover income interruptions due to damage that occurs away from your premises, such as to your key customer or supplier or to your utility company. You can generally buy this additional coverage and add it to your existing policy.

Basic commercial insurance to consider:

  • Building coverage provides coverage up to the insured value of the building if it is destroyed or damaged by wind/hail, or another covered cause of loss. This policy does not cover damage caused by a flood or storm surge nor does it cover losses due to earth movement, such as a landslide or earthquake, unless added by endorsement.
  • Business personal property provides coverage for contents and business inventory damaged or destroyed by wind/hail, or another covered cause of loss.
  • Tenants improvements and betterments provides coverage for fixtures, alterations, installations, or additions made as part of the building that the insured occupies but does not own, which are acquired and made at the insured’s expense.
  • Additional property coverage provides for items such as fences, pools or awnings at the insured location. Coverage limits vary by type of additional property.
  • Business income provides coverage for lost revenue and normal operating expenses if the place of business becomes uninhabitable after a loss during the time repairs are being made.
  • Extra expense provides coverage for the extra expenses incurred, such as temporary relocation or leasing of business equipment, to avoid or minimize the suspension of operations during the time that repairs are being completed to the normal place of business.
  • Ordinance or law provides coverage to rebuild or repair the building in compliance with the most recent local building codes.

Questions to ask yourself when assessing your personal insurance needs

In light of the recent natural disasters happening around the globe, we are unfortunately reminded of the importance of obtaining proper personal insurance. If you are a homeowner, it is pertinent to routinely assess your personal insurance policy’s coverage. Unforeseen events (knock on wood) happen, and at that time you will be relieved of one less stress with the proper policy.

Personal insurance can range from home to auto, and rental to expensive items like jewelry and electronics. If you have something of value that is not yet covered by insurance, there is no harm in learning about your options.

We’re here to help with the legwork. Below are a few questions you can ask yourself when evaluating your personal insurance policy.

  • How much coverage is enough for my home?
  • What would it cost to replace my belongings?
  • Do I need or have reimbursement for additional living expenses if I can’t live in my home due to loss?
  • How much would it cost to repair the inside of my home if it were damaged?
  • Should I get insurance in the case of natural disasters (i.e. flood, earthquake, hurricane, etc.)?

The goal of personal insurance is to guarantee your family is secure, financially and emotionally. At Cleary, we believe a solid insurance policy is a necessary step in order for your family to live life to the fullest. Contact us with any questions.

3 Tips for Building your Startup

The first step is to come up with your business idea – now it’s time to build! In order for your new startup to be a success, you need spunk, determination and a strategy.

But where to begin?

From product, to employees, to clients, the responsibility can be overwhelming. We’ve put together a few of our tried-and-true tips to help you begin to successfully build your startup.

Networking is key

Identify your professional community and engage with it. Nowadays, you can successfully and efficiently network via social media platforms like LinkedIn. While this is a manageable day-to-day tool, we also suggest taking advantage of professional networking events for face-to-face interaction.

Find a balance

A startup is very demanding and can eat up the bulk of your time; however, it is important for you to give yourself (and your employees) a break. There is a reason Google’s offices have Ping-Pong tables, basketball courts and rock climbing walls. These activities help people expand there minds and think outside the box.

Moreover, bonding with employees outside the office can be essential to a company’s success. Mutual respect outside the office will transfer to exist inside the office and ensure that everyone feels safe in the work environment.

Ask questions

Even though you’re the boss, don’t feel like you need to have all the answers right away. Ask questions to people you trust.

People love to share their own experiences. Particularly at Cleary, we are happy to help with your startup questions and provide information about the various types of coverage that would be most beneficial for you.

The Ins and Outs of A Successful Employee Benefits Strategy

Most business owners prefer to recruit employees with proven talent in their fields. This instinct often encourages entrepreneurs to hire top talent quickly, offering competitive salaries and benefits—especially for employees with specific technical skills that may result in direct growth for the company.

But is paying high always the way to attract the best employees? After all, no business can pay its workers more than the value added to the business. At least, not long term anyways.

In order to maintain an ideal benefits strategy, business owners should have a clear picture of the type of employee they want to hire, as well as a firm understanding of their business’ needs. They should also keep in mind that if the compensation level is perceived as low, it will negatively impact both talent attraction and retention.

Again, offering high benefits makes sense in situations where the skills and ability of an employee has a direct impact on the revenue and success of the business; however, for businesses focused on customer intimacy or operational efficiency, a high compensation may neither be affordable nor required. Here, employees make the most impact through process excellence, teamwork, service orientation and discipline—rather than through individual innovation.

It’s also important to customize a benefits plan based on how the employees perceive value. Owners should therefore have a clear understanding of the demographic of its employees (age, skill level, etc.). Making the plan tax-friendly and having the right mix of fixed pay and variable (performance) pay will also bolster a high-performance culture.

Have any questions? Feel free to contact a Cleary representative and we’ll help you build the best benefits strategy for your business.

Myth Busted: Entrepreneurs are NOT actually risk takers

Entrepreneurs are often mislabeled as “risk takers,” while in reality the most successful ones make calculated and mindful decisions. This sense of purpose and deliberation comprise a few of the qualities that differentiate successful entrepreneurs from the average risk taker.

A risk takers’ biggest mistake is depending too much on chance. Too often, they lay everything on the line, and thus significantly fail, sometimes without the means to pick themselves back up.    

In our experience, the difference between a risk taker and an entrepreneur is that the latter create innovative ways to reduce risk. In fact, they actively avoid risk and are dedicated to planning every small step to achieve their goals.

Tell-Tale Qualities of a Successful Entrepreneur

Here’s a cohesive list of characteristics that make an entrepreneur successful:

  1. Ambition. They are always on the lookout for the next inspiration
  2. Effective manager of time. Many entrepreneurs are juggling multiple projects at once
  3. Delegation is key. They know that success doesn’t come alone
  4. Confident and self-assured. You’re taking a chance on yourself, so you better believe you can accomplish your goals.
  5. Socialable and well-liked. It’s a truth of the trade. You have to be the person other people want to work with.
  6. Thick-skinned. You will fail many times before you hit the jackpot.
  7. Creative thinker. Not every idea is original. Many entrepreneurs leverage an existing service or product, and make it better.
  8. Solid communicator. Wasting time because of poor communication is not a luxury an entrepreneur can afford.
  9. Knows when to step away. From the computer, from a project … a smart entrepreneur knows when to take a break and recharge.
  10. Proactive. No one will seek your service or product out in the beginning and it’s up to you to make your voice heard.

It’s important for any business owner to take these aspects into consideration—no matter what type of business you run. Keeping these tidbits in mind may help you become a better owner, leader and entrepreneur along the way.

3 Important Tips for Filing your Commercial Insurance Claim

Whether the damage is small or large, tangible or not, any business owner in the process of filing a commercial insurance claim faces a good deal of stress. More time and effort is needed to maintain the business while repairs are negotiated with the insurance policy provider.

We encourage small businesses to take a look at policies every 2-3 years to ensure they’re properly covered. Prevention is also key: owners should evaluate possible threats to the business, develop recovery plans, and test those plans all in advance.

Scott Lacourse, a contributing writer for the Boston Business Journal, makes a crucial note in relation to small businesses:

“Many small businesses skip insurance altogether, or fail to get the coverage they need to cope with incidents like major flooding. Almost 40 percent of small businesses never reopen following a disaster, according to FEMA.”

The strength of this data demonstrates the importance of analyzing acquired insurance policies and minimizing the effects of destructive events. However, should an occurrence arise, we’ve put together three tips to help with your next (or current) commercial insurance claim:

Be attentive to coverage policy time periods

If a claim must be made, owners should take considerable care in filing the claim within the temporal parameters set by the insurance provider. Otherwise, extra costs and impediments may extend the amount of time for recuperation.

Below is a chart that outlines the time-based functions of certain insurance policies as they handle declared claims and actual occurrences.

If you have questions specific to your policy, contact your agent. However, rest assured that, as shown above, real occurrences (during the policy period) will most always be covered, “no matter how much later they are reported.”

Take inventory, record documents, and stay organized 

The evidence for a claim to be submitted needs to be kept together and controlled. Keeping track of all damage is crucial if these problems are to be resolved efficiently.

Some ways to organize include taking inventory of all materials affected, protecting all documents and copies that may be related to the incident, and even taking pictures or procuring a claim from the police (if the situation is applicable).

It also wouldn’t hurt to stay in touch and follow up with the people involved, especially your insurance adjuster.

Hire a loss management team

In the case of large claims, owners might consider hiring a loss management team.

A loss management team could consist of a professional loss specialist, legal expert, or forensic accountant who would help file the claim. Commercial insurance claims are of a legal nature, after all, and if business owners are not experts in this field, it could help to have someone who is on their side.

This decision, again, would depend upon the severity of the incident that caused the claim and if the owner would find such a support group financially feasible—as it would involve added costs.

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.