This is the last in a series covering the insurance requirements for small businesses. We have covered general liability policies, insurance requirements when hiring employees, and planning for key personnel turnover. The point here is to highlight some forms of less common insurance policies that may be a valuable asset in your company’s protection plan. If you can identify a vulnerability for your business, chances are that you will be able to procure a policy to insulate your business from liability. The variety of policies summarized briefly below is intended to demonstrate the breadth of available options.
Umbrella Liability Insurance: This is a policy that provides liability coverage above and beyond a standard policy. It can be an excellent addition to a company’s insurance portfolio to protect expensive assets from claims or to generally protect a business in an industry subject to excessive liability or lawsuits. Policies are typically in the $1M to $5M range, and can therefore provide substantial protection from incurring legal costs.
Directors & Officers Liability Insurance: This policy is specific to companies with directors and/or officers and provides protection for individuals holding these positions from liability for actions taken in that capacity. The policy protects officers and directors from negligence or malpractice-type claims for the performance of duties as it relates to the business. This can also include coverage for harassment and discrimination suits.
Cyber Liability or “E–insurance” Insurance: With today’s extensive web-based business interactions, acquiring protection against risks from unauthorized use of or access to information, computer hackers, and viruses is critical. General liability policies typically do not cover loss to cyber threats. Cyber Liability covers claims for breach of data security and liability claims for spreading a virus or malicious code or other actions of employees while performing their job. Cyber Liability policies can cover costs due to business interruption and notifying customers of a breach. Some policies will even cover regulatory fines or penalties incurred as a result of a data breach. These payouts can be essential to reducing the impact an attack may have on a business.
Crime Insurance: Criminal acts can have a significant negative impact on businesses. Crime insurance protects businesses from criminal acts, including employee theft (e.g., embezzlement), forgery, computer fraud, employee dishonesty, extortion, and other malicious damage.
Intellectual Property Insurance: This little-known form of insurance has been around for about twenty years, but remains uncommon. It is designed to protect companies from copyright, trademark, or patent infringement claims and typically covers defense costs and adverse judgment in an amount up to the policy limits. Coverage under an Abatement policy may be available to fund legal expenses to enforce patent, copyright, or trademark rights. Depending on the role intellectual property plays for your business, it may be worthwhile to explore this option.
Business Overhead Expense Disability Insurance (BOE): This type of policy works in coordination with a disability policy for an owner. In the event that an owner becomes disabled, the policy reimburses business overhead expenses, including rent or mortgage payments, utilities, accounting/billing and collection service fees, insurance premiums, employee salaries and benefits, and other regular monthly expenses.