The “Modern” Risks of Small Business

December 4, 2023

Small businesses look very different now compared to 20 years ago. While some small businesses started in a “home office” or garage in the 90s or early 2000s, now it is commonplace to start a business in a coworking space, at home, or even with no defined physical space at all. While many still have physical exposures, there are also additional risks that need to be addressed for small businesses. Let’s review them.

Cyber and Data Coverage

Even small businesses have data exposures thanks to all the cloud, client data, and payment information that these businesses store and utilize. Often, cyber liability or data breach coverage that is included or added by an endorsement to BOPs and other business policies may not be enough. Be sure to discuss and understand the exposures of your small business clients when it comes to the storage and use of client/customer data.

Encourage your small business clients to have risk management in place for cyber, including multi-factor authentication procedures. Then help educate them on the potential response to a breach, where their insurance may come into play.

Protecting Their Teams

Staffing, recruitment, and employee retention are more critical than ever in the current marketplace. Part of the attraction for team members is knowing that their company protects them. You’ve likely considered how a good benefits program does this, but what about having the appropriate workers’ compensation coverage?

It is vital to understand roles, have proper classification of employees, and know accurate payroll amounts to help protect these team members. Underscore to your clients to not only have the right coverage in place but to promote having the proper coverage as part of their businesses’ culture and code of ethics.

Liability for Owners and Leaders

Owners, principals, and stakeholders of a company have liability that goes beyond that of an everyday team member. The liability exposures of those who operate and/or consult on business decisions and operations must be protected. But professional liability has multiple facets, and the marketplace is challenging right now, to say the least. Discuss your clients’ exposures with regard to:

  • Errors & Omissions (E&O) coverage is critical for many industries that provide a service. Inadequate work or negligent actions can have even greater exposure in today’s litigious environment.
  • Employment Practices Liability (EPL) insurance is vital for companies with employees, even small teams. Help your clients understand the potential risks of employment-related lawsuits.
  • Directors & Officers (D&O) coverage is needed for those with Boards and/or Officers advising and directing company goals. It helps protect the interests of those providing their valuable time and input for the company.

Having these conversations is more than just cross-selling, it is good risk management practice and vital for reducing your own agency’s E&O exposure. Have these conversations, and if you need assistance with expertise on the subject matter, the team at QuoteWell would be more than happy to assist you.

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