Original Article Date: 02/20/2022
Last Updated: 02/20/2022
Checking your small business insurance for these coverage gaps can save you a lot of headaches down the road. Our agents have assembled a list of some of the most common coverage gaps that we see when working on a new small business account.
In most cases, having a business owner's policy (BOP) or general liability only provides the most basic coverage that your business needs. Read on to discover our most common gaps, and how you can best protect yourself and your business.
Cyber Liability
Zachary Tavolaro, General Manager - Syracuse, NY
Cyber Liability insurance is an essential coverage that most small businesses aren't aware that they need. Cyber coverage provides valuable coverage if you store any customer data - whether it be on a cloud server (Google, OneDrive etc.) or on a physical computer. If you collect personally identifiable information, process customer payments or store a customer's data in any way - you need to have a cyber liability coverage on your policy.
For larger businesses, a standalone policy is best as it will have the most coverage and the broadest definitions. These policies often carry $1,000,000 limits and starting premiums around $1,000 a year. If a standalone policy is not within your businesses budget, many existing BOP or general liability policies can be endorsed to add a smaller amount (Typically around $50,000) of coverage for a few hundred dollars.
Hired & Non-Owned Auto
Taylor Haines, CEO - Buffalo, NY
Nothing is more important when reviewing gaps in coverage than checking for Hired & Non-Owned Auto. Especially if your business has employees that run errands on company time or use their own cars in their line of work such as delivery drivers. When you as the employer request your employee drive while on the clock, in almost any capacity, you are responsible for them as they are driving - even if it is not intentional.
Having a Hired & Non-Owned Auto coverage, either as a standalone policy or a BOP endorsement, is essential to make sure if an accident occurs, you and your employee don't suffer the financial consequences of being uninsured.
Inland Marine
Colleen Riches, General Manager - Buffalo, NY
Making sure your business contents are insured correctly is important - especially for small contractor's insurance where portable tools may not be covered as "business property". For many classes of business, such as landscapers, business property coverage is not enough to provide adequate coverage for portable machinery such as lawn mowers, saws, etc. An inland marine policy can help with insuring those bigger ticket items - especially if they move from job to job.
Employment Practices Liability (EPLI)
Carrie Ward, Associate Agent - Buffalo, NY
Protecting slip and falls are one thing - but what happens when you've been accused of harassment, discrimination or wrongful termination in the workplace? If you don't have Employment Practices Liability (EPL), you're going to find yourself in a very tough spot. EPL provides first party benefits and can even be written to include third parties (Such as vendors or customers).
I highly recommend EPL for all businesses, but especially for those who work in close quarters with employees or customers - doctors, lawyers and other professionals. The cost of the coverage varies depending on the size of your firm, but pales in comparison to the costs you will spend if you do not have the coverage.
Water & Sewer Backup
Keri Stevens, Associate Agent - Uniontown, OH
Don't just assume your policy has coverage for everything- especially an uncovered water or sewer backup claim. Regardless of if you lease or own your business space, it is important to make sure you have Water and Sewer Backup coverage on your business policy. Imagine you own a restaurant, and the sewer line gets plugged - or a sump pump fails - and damages your inventory and owned contents. If you don't have this crucial endorsement, you're likely going to be stuck paying the cost out of pocket.
Most policies have coverage limits ranging between $5,000 and $50,000. Depending on the size of your operation, you may need even more than that.
Equipment Breakdown Coverage
Christine Heideman, Associate Agent - Lyndonville, NY
Equipment Breakdown coverage is an endorsement on your Business Owner's Policy that is extremely valuable for any business. Equipment Breakdown provides coverage for major mechanical systems that are your responsibility. In the event of a major equipment failure such as a boiler breakdown or refrigeration line bursting, equipment breakdown coverage can save your business thousands on repair bills or at worst - replacing the system.
Equipment Breakdown is usually best added as a line item to your existing BOP. However, you should actually review your business policy to make sure this coverage is on there.
Summary
There are many business insurance coverages that are not automatically included in a standard policy. To make sure you are getting the most effective coverage, review your policy carefully to make sure there aren't any gaps.
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About the Author
My name is Taylor Haines, and I am the CEO & Principal of Encompass Agency, Inc. (Buffalo) and Jordan First Insurance (Jordan, NY). I grew up in rural Skaneateles, NY and have over a decade of experience in the insurance industry after my first job in 2012 at GEICO as a direct writer. I am passionate about insurance and its relationship to law, and frequently research the latest industry trends regarding the legal implications of insurance. I earned a bachelor's degree from the University at Buffalo in History and a Master of Science from Buffalo State College in Human Resources.