Risk and liability management is essential for any business, but 75 percent of all businesses in the U.S. are underinsured. Responsible business owners will maintain their business insurance and review their coverage regularly, but certain developments within your business can have a bigger impact on your insurance than others. Here is a guide to four factors that may affect your business insurance coverage.
1. New Service or Product Launch
A new service or product launch is an exciting time for your company that can bring both new revenue and unexpected risks. Every new product from your company must be covered by your product liability insurance, so it's a good idea to check with your insurer before each launch. Without insurance, business owners can be held liable even if their customers were using their product negligently or incorrectly.
Product liability insurance can become relevant in a few different situations. There's always a chance that your quality assurance team could miss a defective product or that an injured customer could feel that your product's warning label was insufficient. Product liability insurance will help pay for your company's legal defense for any lawsuit related to injuries or damage from your products.
2. Upgrading Your Workspace
Upgrading your offices or other workspaces is a great way to boost employee morale and productivity. However, you will need to update your commercial property coverage for any upgrade or addition that increases the square footage of your company's buildings. Your coverage will need to be expanded to cover accidents and other losses in the new parts of your workspace.
While additions to your commercial properties may raise your insurance rates, there are several other upgrades you can perform to help lower your rates. Safety improvements like updating outdated plumbing and electrical systems help to reduce risk on your property and lower your rates. If you live in an area that is prone to flooding, forest fires, or other natural hazards, you may reduce your premiums by adding safeguards against these disasters as well.
3. Hiring New Employees
Whether you are hiring your first employee or expanding your existing team, you should be sure that your business insurance covers workers' compensation. Insurance plan upgrades are often necessary as a company's workforce grows.
Your business insurance needs will be somewhat different if you are hiring independent contractors rather than employees. While employers are not required to provide workers' comp for independent contractors, you will need to check your general liability policy with your insurance provider. Ensure your policy covers you for any actions a contractor may take while working for your company.
4. Adding a Company Vehicle
Commercial auto insurance is the category of business insurance that covers vehicles used by your company. Whenever your business buys, leases, or otherwise uses a vehicle, it must be added to your company's auto insurance policy. Commercial auto insurance protects business owners from liability for property damage and bodily harm caused by business use of the vehicle.
Some business uses for vehicles require specialized insurance coverage due to unique risks associated with that function. Examples include taxi or chauffeur services, food delivery, and towing vehicles. Additionally, while personal use of company vehicles is often covered by commercial auto insurance, this coverage doesn't always extend to vehicle use by family members. Discuss your specific vehicle use cases with your provider to find the most comprehensive coverage.
Virtually every business will face unexpected losses at some point, and you don't want your business to be uninsured when it happens. Remember to review your business insurance when you face these situations as your business grows.