Insurance Tips for Protecting Your Small Business

Communities around the country celebrate the people who truly drive the nation’s economy and define our spirit during National Small Business Week – the first week in May. Driven by an entrepreneurial spirit, there are 32.5 million small businesses in the United States, which employ 46.8% of the private workforce, according to The Office of Advocacy, an independent office within the U.S. Small Business Administration.
To launch and keep a business thriving requires a good amount of passion, a strong business plan, usually a hefty financial investment and a few things most people don’t think about. Like insurance.

With so much at stake, insuring your investment, yourself, employees and property the right way is one of the most important decisions every owner must make. From commercial auto and property to workers’ comp, there are a lot of considerations. So, where do you start?

Know the rules
Check with your state’s Department of Insurance about which coverage is required. As the Small Business Administration points out, “Most states require businesses with employees to pay for workers’ compensation insurance, unemployment insurance, and state disability insurance.” You can find your state’s insurance division here.

Imagine the unimaginable
Before you can decide how to protect your business it’s important to understand the threats. With so many commercial insurance options first figure out your needs and your level of exposure. Fire, slip and falls, loss of income, defective products, injured employees or customers, equipment breakdowns. Don’t say, “That won’t happen to me.” Those are the famous last words of too many business owners. Look at each step of your business, imagine the worst and then protect against it.

Employment Practices Liability Insurance
Employee relations sometimes sour. Most business owners value and respect their employees, and often treat them like family. But disputes can happen and business owners should protect themselves if those disagreements escalate into litigation. Employment Practices Liability Insurance protects employers from wrongful acts that may arise out of their employment practices (such as race, age, sex discrimination, wrongful termination, failure to promote and retaliation). This coverage is quickly becoming a staple in today’s insurance market.

Find security in a digital world
The overall number of data compromises rose to more than 68% compared to 2020, according to the 2021 Annual Data Breach Report published by the Identity Theft Resource Center. Out of 1,862 compromises, 1,600 of those were cyberattacks, the ITRC reported.

It’s important to make sure you’re insured against these types of threats that enter your business online. If you conduct transactions or collect personal information digitally, you will want to explore options like Data Compromise coverage and Cyber Risk coverage. Customers may try to take action against you if their information is ever leaked or stolen by a hacker. Data Compromise Coverage typically provides Response Expense Coverage which helps cover the cost of notifying and assisting your clients after a breach. It can also provide Defense and Liability Coverage when this option is selected, which responds to third party action brought against you by those individuals affected by the breach. Additionally, comprehensive Cyber Risk coverage not only provides coverage against damage to electronic data and computer systems from a virus or computer attack but can also protect your business’s liability to third parties if they suffer damage due to vulnerability in your business’s computer system.

Home is where the heart is
But if your home is also where the business is, you need additional coverage. Your homeowners’ policy does not protect your home-based business. Once you assess the risks to your business you will want to consider adding a rider to your homeowner’s policy to cover basic business risks. But that is only the start. Adding business insurance to protect your business is really the protection you and your business deserve.

Most importantly, be sure to consult with your independent agent to help you determine the coverage your business needs. You may know how to make a mouth-watering orange, cranberry scone or how to build a kitchen that belongs in Architectural Digest. But that doesn’t make you an expert in insurance. Talk with your independent insurance agent and have them provide a plan that will keep your business protected.

Please Note: This content is not intended to describe any specific coverage offered by MAPFRE Insurance. No coverage is provided, bound or guaranteed by this article. Available coverages, credits and discounts vary from state to state and are subject to eligibility criteria and policy terms/conditions, which will control in the event of conflict between this article and your insurance policy. For information about your policy, please review your individual policy contract and speak with your insurance representative.

MAPFRE Insurance® is a brand and service mark of MAPFRE U.S.A. Corp. and its affiliates, including American Commerce Insurance Company^SM (Cal. COA 4928-8), Citation Insurance Company^SM, The Commerce Insurance Company^SM, Commerce West Insurance Company^SM (Cal. COA 1372-2), MAPFRE Insurance Company^SM (Cal. COA 3039-5), and MAPFRE Insurance Company of Florida^SM.