Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 9 minutes
Key Takeaways
- Natural disasters can devastate businesses; the right business insurance provides crucial protection.
- Insurance coverage includes options like general liability, commercial property, and business interruption, but you need to assess your specific needs.
- Catastrophes aren’t limited to natural disasters; any significant loss, including cyberattacks, may require insurance.
- Working with a skilled insurance agent helps you navigate coverage options and ensures you’re adequately protected.
- Regularly review your insurance policies to avoid being underinsured and ensure your business can recover from unexpected events.
If you have spent years planning out your business, finding the right equipment and business location, hiring the right people, and running the right ads, it can be devastating when a fire or flood damages everything that you have worked so hard to build. This kind of disaster wasn’t your fault. You couldn’t have predicted it. It can feel like the world is out to get you when you run into a natural disaster situation.
Thankfully, if you have the right business insurance, you won’t be left high and dry after a catastrophe strikes. Let’s take a look at the kinds of insurance coverage that are out there and help you learn more about protecting your business from this kind of harm.
What Can Insurance Do?
Insurance can feel incredibly confusing. There are many types of policies, and you might not be clear about which policy is the right one to make a claim against.
Some natural disasters (like fire) might be covered under commercial property insurance, but flood and earthquake are often excluded. Business interruption coverage may help replace lost income and cover certain ongoing expenses when a covered physical loss forces a suspension of operations, subject to your policy’s waiting period and limits.
Your insurance does so much more than just replacing the items that you lost. It also offers you peace of mind that your business will make it through even the toughest situations with ease.
Catastrophes Might Not Be Natural Disasters
A catastrophe can take many forms. It doesn’t have to be a flood or a fire. One of your large pieces of machinery could slide off the road due to snow and be totaled. You might have a worker who gets severely hurt on a job site, and their medical bills are hundreds of thousands of dollars. You could experience a cyberattack that impacts the personal data of hundreds of customers.
All of these things can be considered catastrophic, and without the right insurance in place for your business, the cost of trying to recover from these kinds of incidents might be too much for you to afford.
What Kind of Business Insurance Do I Need?
There are lots of different types of insurance policies that you can use to protect your business. You might not need all of them, as some of them are niche-specific. Working with a skilled insurance agent or broker will make it easy to get connected with the right policies for your industry.
General Liability Coverage
General liability is commonly recommended and is often required by clients, vendors, landlords, or contracts, but the right limit depends on your operations and risk. This policy may cover third-party bodily injury/property damage claims and typically includes legal defense, but it generally does not cover your own property losses or professional mistakes. You cannot claim your workers who are injured under this policy, but if other people on your job site are injured, you would make a claim against this policy.
Commercial Property Insurance
As a building owner, your property insurance helps you to cover the structure and the business property. When you rent a space, you typically insure your business’s personal property and possibly tenant improvements, while the landlord insures the building.
Business Interruption Coverage
This coverage allows you to keep doing business even if the worst should come to pass. If you have to be shut down for a time or if you have to move to another location to keep your store going while repairs are done on your regular location, this policy makes it easy to stay in business.
Commercial Auto Insurance
Commercial auto covers company-owned vehicles. If employees drive rented vehicles for business, consider Hired & Non-Owned Auto coverage.
Tools and Equipment Coverage
This coverage protects the tools and machines that you need to do business. Often, these items are very expensive and are also critical to helping your customers. You need this kind of policy to make sure that you can afford to replace your tools if something happens to them.
There are other policies that you might want to invest in, such as Cyber Liability insurance to cover you if your business website is hacked or errors and omissions insurance if you make a costly mistake while you are working on a customer’s job. There are also Business Owner’s Policies (BOPs) that are designed to help you bundle some essential coverages under one policy’s umbrella.
The Cost of Being Underinsured
It’s better to avoid being underinsured, but the goal is to have appropriate limits, deductibles, and endorsements for your business. Make sure that you think about the cost of replacing lost equipment, the cost of medical bills if someone who works for you is hurt, and the cost to get your business location back on track if something like a fire takes place. In addition, Workers’ comp rules vary by state and worker classification. In most states, coverage is required once you have employees, but there are exceptions (for example, Texas allows many private employers to opt out).
Let’s take a look at an example. Imagine that your business experiences a small electrical fire. The repairs are in excess of $30,000. You probably don’t have $30,000 just sitting around waiting to be spent. How are you going to recover from this fire? And what if someone got burned during the incident?
As soon as you start thinking about the actual cost to recover from a fire, an accident, or a theft, you realize just how affordable insurance really is.
There Are No Low-Risk Businesses
At the end of the day, “low-risk” is a bit of a myth. Yes, some industries are known for being dangerous and for being expensive to insure. That does not mean that any business is truly low-risk. You cannot assume that your business is low-risk. The worst can happen, and you need to be prepared for it.
Even if the risks are limited, there are still things that can happen that might easily put you out of business. You don’t need to own a roofing company to need insurance for your business. Your insurance policies are like the safety net that protects your company from all kinds of problems. Without a safety net, how can you have peace of mind about your business?
Insurance is part of your business strategy. It’s what allows you to operate safely, and it protects your clients, your employees, and you as the owner of the business. Your insurance is often even a selling point that makes you stand out from the crowd. You can prove to your customers that you have all the insurance that you need and that you are prepared to do business the right way as you serve their needs.
The faster you recover from an accident or make things right for a client, the better your business reputation. You cannot afford to do business without the proper insurance policies, and you shouldn’t even consider trying.
Catastrophes Aren’t Predictable
The whole reason a catastrophe is a big problem for businesses is that you cannot predict these kinds of losses. You don’t go to work each day expecting a major flood or a big fire. You go to work expecting to have a normal day. When something horrible happens, it’s horrible, in part, because it was unexpected.
This is why having proper insurance and reviewing limits and exclusions regularly is important. You might balk at paying the extra premium for policies that you haven’t made a claim on for the past few years, but if you need those policies and you have chosen to stop paying for them, you would probably regret this false economy immediately.
Insurance coverage is the first and best line of defense when it comes to keeping your business safe. You can lean on your insurance coverage and your agent when something unthinkable happens, and that peace of mind can be truly invaluable. Getting good insurance coverage is as strategic as picking the right business location and the right products to sell.
Choosing Coverages That Are a Good Fit
No single coverage can handle all of your business needs. You may need to have multiple policies to protect different aspects of your business. If you have employees, you probably need workers’ comp. If you make judgment calls each day for clients, you probably need errors and omissions insurance.
Your premiums would be scaled with the risk of your business niche in mind. However, you can often still bundle policies and get more protection for your money. This is why you need to work with a skilled insurance agent who understands your industry and the risks associated with doing business for your company. Having the right coverage can make all the difference when it comes to keeping your business safe, saving money each month, and being able to protect your company for years to come.
Rebuilding After the Unthinkable Happens
If the unthinkable should come to pass, you probably would have a lot of feelings about the stress that you have been under and the future stress that is going to impact you as your business recovers. This is perfectly normal, and it can make it tough to even want to consider making claims or figuring out what comes next. We think of our insureds as our partners. We work with you when the worst happens to help you get back on your feet, even if you’re stressed.
There is no reason to go it alone if your business has suffered a huge loss. You didn’t plan for a catastrophe, but if you have the right insurance in place and the right support from your agent, you don’t have to suffer dire consequences related to this kind of incident.
Work With a Skilled Insurance Agent
If fire, theft, or flood impacts your business, we may help you get the right claims filed, and we would take the pressure off of you as you try to recover emotionally as well as financially. Let us help you get the insurance policies that you need to keep your business safe for years to come. Don’t settle for lackluster coverage that won’t help you out if something terrible happens. You need access to the best insurance coverage you can get, and we can help. Your business plans never include experiencing a catastrophe, but that’s okay! We know how to keep your business safe from these kinds of events because we have been helping business owners with their insurance needs for generations.
