Risk Management 101: Business Risk Assessment Checklist
As you may have seen on our website, we have a blog where we regularly post content about everything from general liability to workers’ compensation to health insurance. We’re experts in all things commercial insurance, so when it comes to identifying and managing risk, we’ve got you covered.
Because of the litigious society we live in, we understand the importance of making sure your company is protected with the best coverage for an even better price. That’s why we’ve been working to compile a list of some of the most important business risk assessment questions you should ask yourself to see how we can help you fulfill your insurance needs.
Do you have employees?
If your company has even just one W-2 employee, you’re obligated to carry workers’ compensation to protect them from on-the-job accidents. Having this coverage minimizes your risk of an employee suing you for not being able to provide them the coverage they needed when hurt. It could also be beneficial to have employment practice insurance, a coverage that protects you from wrongful termination lawsuits, among other things.
Do you have an office?
If you have an office location, you could be in danger of clients getting hurt while entering or leaving. Making sure you have liability insurance for your business covers you for the cost of the injured party’s medical bills and any subsequent damages they’re seeking. If your business is open to the public and you rent or own that space, commercial general liability can provide coverage for claims resulting from someone being hurt on your property. Likewise, this coverage also extends to bodily injury and property damage caused by you or any of your subcontractors who are working at a client site.
Do you or your employees use your own personal vehicles for business purposes?
You may not think an employee running to Staples to pick up a ream of paper is a big deal, but when said employee gets into a fender bender on the way back, you suddenly have more to worry about than just reimbursing them for the cost of the supplies they purchased. If your company rents vehicles or requires employees to travel in their own vehicles or company vehicles, hired and non-owned automobile liability coverage is critical to your commercial insurance coverage—and the cost is usually minimal. It can protect your company if you are being sued because of an accident and can cover the defense costs incurred.
Does your revenue depend on services you provide to your clients?
If your business is based on services rendered to various clients, you’ll want to make sure you have professional liability. Professional liability insurance, also referred to as errors and omissions insurance, is a type of policy that provides protection for professional services that your business offers. If you are performing your work as a contractor or consultant, you can be held liable for negligence or failure to perform the professional duties required by your client. In this situation, failure can be defined as not fulfilling all parts of the statement of work (an omission), negatively impacting the company while completing the outlined work (an error), or perhaps not completing the required tasks to the standard the client expected.
Do you sell a product?
If your revenue stream is based on a physical product that you not only provide in stores but via shipping, you’ll want to consider minimizing the risk of lost profits from products lost or damaged in transit with an inland marine policy. Inland marine insurance is a type of property coverage that extends to business supplies, equipment, and goods being transported in various ways. Coverage can be obtained for transport across the United States. It will cover property from named perils while en route via air, land, tunnel, bridge, inland waterways, or communication towers.
Is most of your work carried out by computer?
Being able to run a company with only a computer may keep business expenses low, but it also leaves you at risk for viruses, network breaches, and lost data. Cyber liability insurance is a policy a business can take to protect themselves from liability situations arising from the accumulation and distribution of data and other forms of electronic liability. For example, if a data breach were to occur, a cyber liability policy can cover the expenses related to investigation, notifying the involved parties, legal costs, and fines. It can also cover intellectual property rights infringement and network security liability. Cyber liability insurance can alleviate the financial burden of handling the fallout from an unfortunate cyber attack, data breach, or failure of your network security.
Do you have an officer, partner, or employee essential to your company’s operations?
If you or anyone in your company are essential to the operations of that business in a way that would be hard to substitute if something were to happen, key person insurance can compensate your business enough to keep the company running while an adequate replacement is found/trained or while loans, investments, or debts are being settled. Key person insurance is a form of life or disability insurance that a company can take out on one of their essential personnel that would compensate them if this person were to pass away or become disabled and unable to perform their job. This key person would be someone who is responsible for the majority of profit the business makes or has a unique skill set that makes them almost irreplaceable. Likewise, Directors and Officers liability insurance is coverage a company can purchase to cover losses resulting from legal action brought against their board of directors or corporate officers. If you are an owner, partner, or CEO of a company that has shareholders, you should consider Directors and Officers liability insurance.
Do you have multiple locations nationwide?
A commercial liability umbrella is a good fit for a business with multiple locations open to clients or with multiple insurance coverages that could require higher than average limits. The umbrella policy can be especially useful if you work under a contract that specifies you’ll need high coverage limits. Commercial liability umbrella insurance provides coverage up to a certain amount above and beyond the limits of your company’s general liability, hired and non-owned automobile liability, or workers’ compensation insurance. It lowers the chances of having to pay out of pocket for claims that could be covered for only a few extra hundred dollars a year, in some cases.
Do your employees work at client sites?
If you have employees that work at client sites, you are sadly in danger of having someone dishonest employed in your company, someone who could potentially steal from a client or from you. A first-party crime bond is a form of insurance protection that covers businesses against purposefully wrongful acts performed by its own employees. Alternatively, a third-party crime bond is a form of insurance protection that covers businesses against purposefully wrongful acts performed by consultants and contractors working for them. If your business hires any independent contractors or consultants, a first- or third-party crime bond can provide coverage for a consultant or contractor who commits a crime such as fraud or theft.