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P.O. Box 1750, Cockysville, MD, 21030
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Business Protection Bulletin
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Reviewing Your Risks
The more your business grows, the more you have at risk should something go wrong. You may have been advised to go ahead and cover every new development as it comes up. Obviously if you've just bought a new company car, you'll want to see how to get that covered under your policy. If you've just added your first physical product to your store, then you need to look at insurance to cover physical goods and shipping. Sometimes, however, new risks creep up on us.
This is why we recommend an annual review of your insurance policy and what you need covered. If you want to add a checkup every six months to that program, all the better, but at the very least you should take a day out once a year to make sure that no new liabilities, risks and vulnerabilities have snuck up on you. Here's what you'll want to consider:
Directors and Officers Liability. This type of insurance will cover you if someone in management winds up being sued for their conduct. You may trust your top brass, but can you be absolutely certain you're never going to, say, bring on a temp or an intern who misreads their intentions?
High-Risk Customers. Have you recently branched out into a new area of business, a new product, a new demographic? Some clients and customers bring a higher risk, and demand greater coverage than others.
Employment Practices Liability. Has your turnover rate increased this year? If you wind up needing to fire someone, it'll be nice to know you're covered if they decide to call a lawyer about it.
Travel. Travel-related liabilities really do sneak up on you. You may not notice that you've had your people driving twice as many miles this year as last, but it compounds quickly. You may be able to save some money by covering rental cars and other travel related risks under your business policy.
Property Values. Having a successful new business in the area does wonders for property values. Make sure that you're insured for what your office is actually worth, not just what it was worth when you moved in.
Once a year, you should map out your assets, your resources, your risks, your customer demographics, everything that makes your business what it is, everyone who might sue you, everything that might break, everyone who might quit, and make sure that you have a safety net should something go awry.
HMS Insurance Associates, Inc.
Business Protection Beyond Insurance
Business protection insurance is great, but let's be honest: insurance is a safety net. Business protection insurance protects the business as a whole by making it easier to recover from a loss, but it only helps you to recover, it won't stop bad things from happening, it's not magic, so you need to protect your business in ways other than simply taking out a robust policy. Here are a few points that can help you to reduce the chances that you will have to cash in your policy sooner than you'd like:
Make Safety a Priority
Whether you're running a construction site or an office, accidents can happen. It's a good idea to run regular safety checks, make sure your outlets and other utilities are working properly, ensure that you have first-aid kits on hand and that everyone knows where they are, keep a clean house, run fire drills, keep your exits clear, and don't overwork your employees.
Keep your Software Up to Date
It's common sense that you need to keep your computer systems secure with the right software, but you should also make sure to keep your operating systems and other software up to date, along with your security software. Outdated software tends to be more vulnerable to cyber-attacks, and you don't want a system crash costing you a week's worth of work.
Security Into Account
No matter how hard you work to keep your computer system secure, it's not going to stop someone from throwing a brick through the window and stealing thousands of dollars worth of equipment. Cyber security isn't the only kind of security that matters. Security guard services, better lighting or moving to a safer location when it's in the budget can all help to keep your business safe.
Practice Regular Maintenance
Have your server room cleaned every six months or so, do regular tune ups on your A/C units and company vehicles, make sure that things are running smoothly. A broken air conditioner probably isn't going to bankrupt your business, but it's going to cost you some money and it's going to be a hassle to repair or replace.
Prepare for Natural Disaster
Study up on how to protect your business from natural disaster at
. You may be covered against flood and fire, but wouldn't you rather not have to take several months out of doing business while you rebuild your offices from the ground up?
HMS Insurance Associates, Inc.
Is it Time to Step Up Your Policy?
Some entrepreneurs choose to stay small. The rewards are smaller when you never move your business out of the garage, but so are the risks. To put it one way: You can't get sued by employees you never hired. There's nothing wrong with choosing to stay small, but for most of us, the goal is growth. We may start out by selling a few homebrewed apps developed solo or with a few friends, but eventually, we want more than just a spot in the iOS app store, something too big to run on a couple laptops. We want to move into an office, we want to hire top talent at competitive rates, we want to be able to look back and say "I can't believe we've come this far."
At some point, this means upgrading your insurance. The good news is that it's easy to know when it's time to step up your policy. It comes down to this: Have you recently made any investments too big to lose?
You might not need to bother going through the paperwork when you buy a new office chair or upgrade your laptop with some extra RAM, but you shouldn't wait for major growth to reassess your policy. Suppose, for instance, you're hiring a freelancer for the very first time since you started your business, and they're coming by the home office for a meeting. Well, now that you've got people coming over in connection with your company, you're going to need to have some kind of liability policy in place. You don't need someone twisting their ankle on you doorstep and putting you out of business.
Upgrading your policy has as much to do with exploring new frontiers as it does with your business growing in value. In truth, you might even have a policy that will keep you covered should your company double in value overnight, but will you be covered if you're shipping out your first physical product and hundreds of units get damaged on the way to delivery?
To put it simply, there's quite a bit more to being covered than simply making sure that the dollar values are still accurate. As your business grows, it will also change shape, growth is not strictly linear. You will be exploring new avenues of distribution, new ways of developing products and selling services, and you need to ensure that whatever you're doing, if it involves any sort of risk that you can't easily cover out-of-pocket, will be taken care of by your policy.
HMS Insurance Associates, Inc.
3 Policies You May Not Have Considered (But Should)
A "company" is sort of a weird concept, isn't it? On the one hand, a company is just a name, a brand that has earned some trust with the public. If Coca-Cola lost all of its funding and all of its bottling plants right now, they could hand the name and the secret recipe over to anyone with a basic working knowledge of business, and the new guy would be making millions of dollars within a week, whether that means selling the concept to Pepsi, or brewing it up at home and selling it on the Internet. On the other hand, your company is also the people who work for you, the building in which you conduct business, the phones, the computers, the furniture, the company cars, and more abstract but still very real resources like money, time, energy and staff morale.
What we're saying is simply that something as complex as a business presents a lot of vulnerabilities, a lot of risk. We might not always think to cover those risks, we might not even know that those risks exist, and that's why we put together this list of things you might not think to cover, but should:
Commercial Auto Insurance
Easy question here: Do you use own a personal car that you use for business? We mean more than just driving to and from work. Do you ever deliver items in your car? Do you let employees take your car to make bank drops or to pick up supplies? In business, we're often working with somewhat fluid definition of what's what. You may come to a point where your personal auto insurance policy isn't going to get you everything you need should something happen to a vehicle that has transitioned into being a commercial auto. It may be wise to see if you can cover your personal car under your business policy.
Even if you don't manufacture physical products, if someone decided to sue you over bugs found in your app, it wouldn't be the first time that had ever happened to anyone. Through your own fault or the user's, you can never be 100% certain what's going to happen when someone uses your product for the first (or hundredth) time. Better to cover yourself, and your customers, than face a scandal and a lawsuit.
Bad news: You can't really copyright an app. Sure, you have a means of recourse if someone steals your code and releases it themselves... Unless they change the app's name and make sure nobody finds out they stole code directly from you. Good news: Data breach insurance will make sure that you're covered anyways.
HMS Insurance Associates, Inc.
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