With about 3 million small businesses operating in Texas and 4.9 million employees, risks are inevitable. In 2018, the state reported 2.8 million non-fatal workplace injuries in the private sector. If you own a business in Texas that attracts foot traffic, accidents involving visitors to your premises may even lead to lawsuits, pushing you into court and running up high bills.
The best way to manage small business insurance risk is usually with a Business Owners Plan (BOP), which covers commercial property damage and general liability. It will pay for damage to equipment and other contents on your property. Make sure you understand what type of perils your specific policy covers, such as fire and certain types of water damage. A BOP plan also financially protects your possessions from theft and burglary.
A business can shut down at some point due to disruptions beyond your control. In such instances, business interruption insurance can pay for losses in revenue or lost wages for employees. Typical perils covered by this protection include fire, wind, lightning, and falling objects.
It's important to note that you cannot assume that an insurance policy covers everything it implies. In other words, business interruption coverage pays for many disruptions, but the policy might have exclusions for things like COVID-19. That's why it's crucial to review any policy carefully before you sign it and to ask your insurance agent questions about anything that seems unclear.
Your BOP policy includes commercial general liability (CGL), which covers injuries or illnesses suffered by visitors to your establishment. A CGL plan, which you can buy separately, should be sufficient for covering such issues. Without the right liability insurance in place, you could end up paying for expensive medical bills and court costs. If an employee is injured or becomes ill, workers' compensation, which is legally required for most employers in all states, should cover the costs.
Be aware of how risk and coverage limits are related. You don't need high coverage limits if there's almost no chance of an injury at your workplace. Nonetheless, you do need to consider coverage limits if your type of business poses high risks of injuries, such as involving dangerous chemicals or machinery.
What separates general liability from professional liability coverage is the latter covers professional errors, such as bad advice to clients. This coverage can also protect against allegations of negligence. Professional liability insurance is also commonly referred to as errors and omissions insurance. It's useful coverage if a client complains about the quality of service or accuses your employees of causing losses due to inaccurate information or advice.
Another type of special liability insurance that businesses are increasingly buying is cyber liability insurance, also known as data breach insurance. It covers various issues that may result from a hacker attacking your computer system and stealing sensitive information or damaging equipment.
Any business that stores confidential data electronically should be concerned about the possibility of a data breach. Even the best cybersecurity can be compromised by experienced cybercriminals. So it's important to have insurance in place that covers breaches; otherwise, your company can face disastrous capital-depleting lawsuits.
The key to avoiding financial fiascos that can collapse a business overnight is to purchase appropriate insurance to protect your assets. Always remember that insurance is a strong form of risk management. To get started on your customized business insurance in Texas, contact our experts at Reata Insurance Group today.