Sometimes it seems like there is no end to what needs to be insured for your business. General liability, workers' compensation, health insurance, product liability…. Most business owners are well aware of general insurance coverages.
Below are additional specialty policies that address unique industries, concerns and eventualities.
While each coverage may not apply to every business, many are applicable to a host of small businesses.
A bailee is an individual or business that takes temporary possession of a customer's property, such as a dry cleaner or valet.
From the moment you issue a receipt acknowledging that you have taken custody of the customer's property until that property is returned, bailee insurance covers all losses and damages to the property.
Business interruption insurance covers loss of income when you are required to close your business as a result of a disaster or malfunction. According to an Allianz Global Claims Review for 2010 to 2014, the average value of a BI claim was $2 million.
Allianz Top 10 Causes of Business Interruption:
- Fire and explosion
- Machinery breakdown
- Faulty design/material/manufacturing
- Cast loss (entertainment)
- Human error/operating error
- Power interruption
While property insurance may cover the cost of damages to your building, it will not cover the sudden halt of your income stream. BI provides coverage until your business is operational again.
For companies that collect and store client information, Data Breach Insurance offers protection for when your computer network is hacked and customer information stolen.
Loss of Personal Identifiable Information is a serious concern. In 2014, over one billion records were stolen through data breaches, with an average cost per breach of $3.79 million, according to the 2015 Cost of Data Breach Study: Global Analysis.
Most DB policies cover expenses from informing customers of the breach and public relations to identity protection solutions and legal expenses.
Directors and Officers
Directors and Officers (D&O) insurance covers your corporation against claims made due to the wrongful actions of your directors and officers. In a recent survey conducted by Chubb Group of Insurance Companies, one in eight businesses had experienced a D&O lawsuit within the past five years, costing an average of $225,682 to litigate and settle.
D&O is usually purchased in packages with varying levels of coverage to pay defense costs, settlement fees and judgments for when the corporation cannot indemnify its directors or officers. Coverage can be extended to cover the company itself.
Fidelity bonds protect your company from employee misconduct and cover anything from theft and property damage to embezzlement of pension funds.
You can purchase blanket coverage, which protects against all employees, or scheduled coverage, which protects against only certain individuals.
The Employment Retirement Income Security Act (ERISA) requires that companies offering pension plans purchase an ERISA fidelity bond equal to 10% of the total pension plan assets to protect against illegal mishandling of accounts.
Inland Marine policies cover goods in transit over land, whether by truck, train or airplane, and extends to goods stored at docks or warehouses.
There are two types of IMI: Peril and All-Risk. Peril policies allow you to specify individual risks to the assets you want covered. All-Risk policies insure against damage and loss regardless of the cause.
While shipping companies offer insurance on the assets they move, these companies have limits. FedEx and UPS set specific limitations on the maximum value that can be insured on any package. For businesses shipping high-end items, such as artwork, jewels or precious stones, these values may not provide enough coverage.
According to the National Association of Insurance Commissioners, 71% of firms surveyed said their success was very dependent upon the production of one or two key employees. Key Employee insurance protects against the death or sudden disability of those employees.
A Key Employee is an individual whose loss would cause severe negative financial consequences to your business.
Key Employee policies vary depending upon the industry and the expected loss of income that would follow in the wake of the employee's demise.
Patent Infringement insurance protects your business from claims that you have—knowingly or not—violated a patent-holder's rights. The policy covers the legal costs associated with this accusation.
Many entrepreneurs make the mistake of not properly protecting their company from patent infringement lawsuits. It is worth considering that 629,647 patents were applied for in 2015 alone. Even if you are not aware that your company's “new” product is already under patent by someone else, you can still be sued for infringement.
The American Intellectual Property Association found that the average patent lawsuit (with $1 million to $25 million at risk) will cost $2.8 million through final disposition. Few businesses can shoulder these legal fees.
Trade Credit insurance protects businesses that deliver goods or services on credit from financial losses which a client does not or cannot pay. For instance, if a client goes bankrupt and cannot pay the debt owed, TCI covers the loss of income.
TCI extends to losses due to political upheaval and war. Policies can even be structured to insure single high-risk transactions, or transactions with certain individual risky customers.
TCI is most common in facilitating international trade by allowing businesses to import and export goods and services on credit (accounts receivable). This is essential in a globalized economy. In 2013, the credit insurance company Euler Hermes provided coverage for global business transactions worth $789 billion.
That's a lot of business.