Business insurance is your first line of defense in protecting your company from a wide variety of different potential threats. Without the right insurance—or with too little of the insurance you do need—you could be at great risk from the costs of a lawsuit, judgment, or in the event of an unforeseen emergency or disaster. While we can help you determine the appropriate coverage for your company, here are a few frequently made errors to avoid when investing in business insurance.
1. Purchasing a policy that doesn’t offer you legal representation in the event of a lawsuit
The right business insurance will not only pay out if someone wins a lawsuit against your company, but it will also hire a lawyer for you and pay your legal bills if your business is ever sued. Make sure your insurance coverage offers a “duty to defend” your business in the event of a lawsuit, and not just a “duty to indemnify,” or pay out, in the event of a judgment.
2. Failing to insure against loss of income
If your business is damaged in a fire, storm, or another unexpected event, having commercial property insurance will pay to rebuild and repair your workspace. However, if your business is shut down for even a short period of time, the loss of income can be devastating. Given this risk, consider investing in business interruption insurance, also known as business income coverage.
3. Failing to adjust your coverage as your business grows
If your insurance isn’t regularly reviewed and updated as your operation grows, your coverage may prove inadequate, putting your business at risk. It’s a good idea to review your insurance coverage on an annual basis, but as your business evolves, you should also revisit your policies whenever your company undergoes significant changes involving infrastructure, assets, and personnel.
4. Failing to insure against employee lawsuits
In addition to having clear employment agreements and formal processes for hiring and firing, you should invest in employment-practices insurance for your company. This coverage protects your business against lawsuits brought by both employees and contractors, and the right coverage will not only pay out in the event of a judgment against you, but also pay for your legal costs.
5. Relying on homeowners insurance to cover a business run out of your home
You might think your homeowners insurance policy would protect your home-based business from losses and liabilities, but this is a common misconception. Your homeowners policy doesn’t offer coverage for any business property, including both equipment and structures used for business purposes. Your homeowners policy also doesn’t cover against business-related liabilities, such as slip and fall accidents.
The Right Coverage For Your Business
Every business has its own unique risks and assets, so there’s no way to know exactly what coverage your company needs without an evaluation. Before you sit down with an insurance agent, meet with us for an insurance audit.
AB Law, PLLC is a full-service business law and estate planning firm that serves clients throughout Texas. All consultations are free and no question is too silly, ridiculous, or complex. https://calendly.com/ablawpllc www.ab-firm.com