The early part of 2020 has been dominated by uncertainty.We highlighted five key risks in our article titled Risks to Prepare for in 2020. Make no mistake, every one of these demanding risks are exacerbated by the threat of a global pandemic. The ongoing COVID-19 Coronavirus epidemic reminds us that risks can be unpredictable and have trickle-down effects on businesses of all shapes and sizes. Unpredictable events like COVID-19 remind businesses to revisit their insurance policies to ensure they are prepared for any risks on the horizon.
All businesses should have these four insurance policies in place:
Business Owner’s Insurance
A business owner’s policy, or BOP, combines the most common types of property and liability insurance a business owner needs into one convenient, comprehensive package at a competitive rate.
BOP insurance is generally purchased by small businesses. Mid-market and larger businesses with more complex insurance needs generally buy separate policies for each type of insurance. A BOP protects a company from a wide variety of damage, from customer falls to property damage. Because the insurance is bundled, a business owner’s policy is often less expensive than if individual coverage was purchased separately, however it also offers lower limits of protection. BOP insurance usually includes property insurance and business auto.
Errors and Omissions Insurance/Professional Liability
Companies that provide professional services such as giving advice, making recommendations, designing things, providing physical care or representing the needs of others, should purchase professional liability/errors and omissions insurance.
This type of coverage protects an organization against third party lawsuits by customers, clients or patients claiming that the business’s failure to perform a job properly has injured them. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides legal defense costs, even when there has been no wrongdoing. A common example of professional liability insurance is malpractice insurance for doctors.
Directors and Officers Liability Insurance/Employment Practices Liability Insurance
Directors and officer’s (D&O) liability insurance protects directors and officers of corporations or not-for- profit organizations if there is a lawsuit claiming they managed the business or organization without proper regard for the rights of others.
The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides for legal defense costs, even where there has been no wrongdoing. It is very common for Employment Practices Liability Insurance (EPLI) to be offered in combination with D&O coverage. EPLI covers (up to the policy limits) damages for which an employer is legally liable such as violating an employee’s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides legal defense costs, which can be substantial even when there has been no wrongdoing.
A stand-alone cyber insurance policy provides protection to a company in the event that a cyber or data breach occurs. This type of policies provides several different components of coverage including:
Liability protection against third party lawsuits in the event employee or customer data is compromised.
Breach response coverage both for the costs to bring in experts that can identify any intruders to a company’s systems and mitigate the breach so systems can be fully restored to normal operating standards.
Ransomware protection in the event that a company’s systems are hacked or held hostage by a cybercriminal.
Notification and credit monitoring services in the event of a breach to notify any affected individuals.
Business interruption costs incurred as a result of a potential cyber-attack.
These aforementioned coverages are great financial hedges against whatever risks the remainder of 2020 may bring.