Having the right Rhode Island business insurance policies in place is important for every business, regardless of industry.
An unprotected business is susceptible to lawsuits, significant damage, business interruption, or even organizational collapse. Here are 5 insurance policies every RI business needs to ensure their business minimizes risk and thrives for years to come.
Commercial Property Insurance
Most business owners understand the need for commercial property insurance. It protects your business from property loss or damage. You don’t need to own a building to need commercial property coverage. Your business belongings including furniture, computer equipment, tools, inventory, and more can be covered by a commercial property policy even if you are operating a home based business or leasing space to run your operations. However, policies do not cover all perils unless you make special provisions. For instance, many do not cover earthquakes and flooding. Be sure to ask your agent what is excluded or if there are other options you could add onto your policy to get the broadest coverage possible.
General Liability Insurance
Even when your business uses sound judgment and established business practices, it can face a lawsuit. Customers or even a bystander could sue if your business actions, services or products cause bodily injury or property damage to them. If the courts find you did not exercise the required amount of care to prevent injury or damage to others, they consider it negligence. This usually involves substantial financial restitution to the injured parties, and sometimes payments last a lifetime.
Commercial general liability insurance can cover settlement costs, legal fees, medical expenses, and the cost of appeals. It may also protect you from libelous statements or slander that impact your profits. Many clients and suppliers will not work a business unless they have liability insurance, because large settlements can ruin a business.
Business Interruption Insurance
You cannot predict the future, but you can minimize risk. Employees make mistakes, unpredictable disasters occur, and equipment fails. Any of these factors can destroy stock, severely damage buildings and equipment, and even halt operations.
Wise business owners have property insurance to restore their inventory, replace or repair equipment, and to rectify building damage. However, property insurance does not pay the bills if you cannot operate. Major events often take months, or even years to set straight.
When cash flow stops, you must delve into reserves. When those run out, you must borrow to stay afloat. As months go by, you may not be able to pay your staff. Even the most dedicated employee needs to pay their bills.
Business interruption insurance provides you with the funds your business needs whenever you’re forced to shut down due to a covered insurance claim. It provides income for operating expenses such as your mortgage payment or rent, utilities, taxes and payroll. It is invaluable for companies that stock many items and if a business needs specialized equipment or premises to operate, because it can take many months to get up to speed again.
Directors & Officers Insurance
Directors and officers insurance grew rapidly over the last 30 years, and with good reason. More companies operate internationally today, and managers must comply with various government and regulatory bodies and manage risk globally. Managers sometimes make mistakes and may become liable for losses and involved in costly litigation.
D&O policies offer liability coverage against claims which arise from their decisions and actions while performing normal duties in a very complex environment. Coverage includes past, present and future directors and officers, and company subsidiaries.
A 2008 report found former employees made 40% of claims against directors and officers, but regulators and shareholder groups accounted for the most substantial. In 2015, the U.S. Department of Justice confirmed they’re committed to targeting corporate executives in cases of corporate wrongdoing.
Cyber Liability Insurance
Hacking is now a very serious threat to business. IBM estimates businesses handle about 46 attacks every day, and about 1.7 per week successfully penetrates corporate defenses.
The 2015 US State of Cybercrime Survey found most hacks still target large and medium-sized businesses. They also state that “almost half of boards still view cybersecurity as an IT matter, rather than an enterprise-wide risk issue”, although this is not the case.
Ingenious hackers make it harder to discover intrusions, they’re more destructive, and they are more difficult to correct. “Ransomware” is also on the rise where hackers demand money for recovery of company data.
Despite all the media attention regarding hacking, few businesses have cyber liability insurance. The loss of third-party data is extremely costly and it severely damages your business reputation.
Give us a call and talk to one of our agents. We’ll ensure that you have adequate and affordable RI business insurance. We can provide free risk assessments and consultations for any sized RI business.