7 Things You Didn’t Know Business Insurance Might Cover

We aren’t born understanding the nuances and complexities of business insurance. Heck, many of the concepts are foreign to us so we hold on to popular myths about insurance. So, it’s understandable if you’re asking, “what does business insurance cover?”

But you didn’t get this far as a business owner without some of the basics.

You know that auto insurance is mandatory in your state, that you know that you need health insurance and that your mortgage lender will require insurance on your home. And, as a business owner, you’ve got a sense of the insurance you’ll need to protect your enterprise. Even freelancers know they need business insurance.

You’re fully prepared to secure a good general liability insurance policy in case of legal issues, and you know you’ll need commercial property insurance for your business equipment and furnishings.

But this is just the surface of what is available to the business owner.

If you have a risk that needs to be insured, as long as it’s not going to happen, or of a speculative nature, there is someone out there willing to provide the insurance.

In insurance circles we even make jokes about what’s insurable; Jennifer Lopez’s derrière, alien invasion, and even zombie holocausts conceptually could have an insurance product for the unforeseen risk they present.

Here are 7, dare we say, more practical, things that you likely didn’t think were available to protect your business.

1 | Losses Below Your Hurricane Insurance Deductible

I know, we’re in California, and most of our clients are here on the left coast, but for those of you with business operations in hurricane-prone areas, this may prove to be pretty useful.

You can get insurance for … well … your insurance.

Hurricane PM has designed a product to fill the gaps in the current hurricane insurance market. Don’t take it from us, the Insurance Journal has even written about this innovative new approach to catastrophe insurance.

Why is this a good idea?

Traditional Commercial Property Insurance excludes coverage for hurricanes, so if you want to have coverage for damage caused during a hurricane, you’ll need to purchase Hurricane Insurance or add it to an existing policy if you need coverage for storm surges and high wind damage.

Because the cost of hurricane insurance can be expensive, many businesses will elect to take higher deductibles, but in the event of a loss, the deductible expense can be a burden.

This is where this type of insurance comes in handy, you can add this new insurance and in the event of a covered loss during a hurricane you may have coverage for:

• Losses below your deductible.
• Business interruption expenses.

Not a bad option if you’re concerned with hurricane losses, and you need to strike a balance between the monthly expense and the lump sum of a large deductible.

2 | Your Ransom If You’re Ever Kidnapped

This one is so Hollywood. I think they even made a movie with Russel Crowe called Proof of Life, where Mr. Crowe is a hot-shot, freelance professional hostage negotiator who gets high-profile clients for high-end corporations and insurance firms.

Maybe you’re not a high-end, high-net-worth target traveling abroad in hot zones of political conflict. But if you are, you can add Kidnap & ransom to your professional liability insurance policy.

One of our insurance carrier partners does this, and you can check it out for yourself on the Travelers website.

3 | Your Fridge Full of Spoiled Goods

Restaurants, grocery stores, florists, and tobacco shops all deal in the world of perishable goods. If this is your business, having spoilage coverage is extremely important.

Refrigeration units do break.

Some Business Owner’s Policies will have a sub-limit for spoilage, and in other instances, you’ll need to add this coverage to your commercial property insurance policy. The important thing is to have the proper coverage for spoilage, that can pay to replace your spoiled goods when:

• Your heating or cooling equipment fails or breaks down.
• Your power goes out.

4 | Your Accidental Destruction of the Environment

Sure, this one sounds like it would come from the mind of Dr. Evil, but it’s a real thing. For some business types, regular business activities have potentially adverse consequences for the environment. If this is your business, it may be liable for injuries or other damages caused by an accidental release or discharge of the following types of things:

• Smoke
• Vapors
• Soot
• Fumes
• Acids
• Alkalis
• Toxic chemicals
• Liquids or gases
• Waste materials
• Other irritants or contaminants

During the 1980s pollution exclusion had become a battleground for insurers, and exclusions for environmental hazards made their way into the standard general liability protection. So, if you’re going to rely solely on your general liability insurance, you may be out of luck in the event of an environmental hazard.

The good news is that you can add Sudden and Accidental Pollution endorsement to your general liability if these contaminants are something you regularly handle and accidentally finds their way into the local environment.

5 | Product Recalls

The last thing you want to have to deal with as a manufacturer is a realization that your product is defective, and may harm your customers. What a nightmare.

As the sole entity is responsible, you have to recall the products to eliminate or reduce the potential harm. But this choice will cause considerable losses to your business along the way. Your product liability insurance, which is often included as part of your general liability insurance coverage, may offer you coverage for the cost of recalling products. In fact, it may also include coverage for the destruction of defective products as well.

Product liability insurance is an important part of your overall insurance protection, if you would like to know more you can read our post,  “Understanding the Liability in Products Liability Insurance.”

6 | When a Key Person Goes to the Great Beyond

If you’re like me, you do a little bit of everything for your business. You’re a pretty important person to your company’s success. This isn’t uncommon, many companies, even large companies, have key employees or executives who, if deceased, would be a huge loss to the organization.

Sure, this sounds all too gruesome, but it’s true. When a key employee, co-founder, or executive is lost, the business needs to find a way forward.

Key person insurance is a form of life insurance that the business can purchase, and it provides protection against certain damage your business may incur in the interim until a replacement can be secured.

7 | Your Cyber Extortion Expenses

Some companies have a rich database of consumer or client data. For a hacker, this can be a honey-hole. A place for them to extract data that you can’t afford to have to get out into the public domain.

What would you pay for that security?

For cyber-criminals whose intent is not the actual stealing of your data, but the extortion that comes with the loss of its security, you need protection. Cyber liability insurance can cover the costs of negotiating with digital demons.

Not sure this can happen to you, just look at the big names that have been hit; Target, Chase Bank, and the list can go on and on. Want to learn about the various ways your business is exposed, check out our post: “Have you Full Assessed Your Cyber Liability Risk?“

The bottom line

So, if you’re asking “what does your business insurance cover,” then the answer is … a lot of things. Your business insurance provides you with a set of standard coverages but there are many add-ons or separate policies that can be purchased. These additional coverage options can help a business to close the gaps, or provide additional protection based on the type or geographic location of your business.