The COVID-19 pandemic and the related shutdowns have been a huge hit for the economy. Some businesses are more impacted than others, with many small (and some not-so-small) businesses reportedly unable to bounce back from the financial losses they sustained in 2020. Understand Small Business Insurance in-depth with the latest reforms.
According to a July poll from the U.S. Chamber of Commerce, around 58% of businesses that were still open or were opening up again soon said they feared permanent closure because of the financial hit. Many businesses scrambled in 2020 to enact new policies and procedures to help reduce the financial woe caused by COVID-19 and help protect against similar risks that could arise in future situations.
This type of preparation is called disaster planning or continuity/contingency planning. And no matter what type of business you have, how big (or small) your business is or whether there’s a global pandemic on the horizon, disaster planning is something you should be engaging in.
SCORE.org offers a wide range of resources to help small businesses engage in contingency planning. Check out its webpage for articles, checklists and templates covering a range of business concerns, including technology, finances, communication and other important considerations. Learn how you can be more prepared before, during and after any type of disaster.
The Role of Small Business Insurance in Disaster Planning
Insurance is the original kind of disaster planning.
Consider something common, such as auto insurance. Why do you buy it? The only reason you carry car insurance is in case you get into an accident. You’re planning ahead for the possibility of a minor disaster (in the form of a wreck) by purchasing insurance that helps you cover the costs and minimize your losses.
You don’t know that you’ll get in a wreck. It’s just a possible outcome of driving a car.
Similar kinds of events resulting in a financial loss are always possible when you own a business, and there’s insurance you can buy to help cover costs related to those events and minimize your losses.
Is There COVID-19 Insurance for Businesses?
You might be wondering if there was a specific type of plan you could have purchased to deal with issues related to being caught in a global pandemic.
Many companies have business interruption coverage. This type of insurance is meant to cover losses when the normal course of business is interrupted by something like a natural disaster, such as a hurricane. The insurance might kick in to help cover necessary bills or even employee wages, depending on what type of policy you have.
In most cases, these plans aren’t really designed to cover losses associated with mandated shutdowns during a pandemic. However, it’s important to understand your exact coverage if you have these types of plans. Reach out to your agent or file a claim with your insurance company if you think you might have a case for business interruption coverage at any time.
Types of Small Business Coverage to Consider
Specific COVID-19 insurance might not exist for businesses — and since the pandemic has already hit, it would likely be too late to purchase it — but that doesn’t mean you should ignore other insurance options. If you haven’t already done so, take a look at your small business insurance to ensure that you and the members of your staff are as covered as possible should unexpected events arise.
Business insurance can cover a wide range of needs. In addition to business interruption insurance, here’s a rundown of some of the most common types of coverage you might want to consider.
Business Liability Insurance
Liability insurance covers you if someone experiences injury or other negative consequences on your business property or as a result of your actions or potential negligence. This type of coverage helps pay for damages sustained by someone else in covered scenarios.
For example, if someone slips and falls on water on the floor in your office or if one of your employees causes damage to a client’s home while on a field call, liability insurance helps pay for those losses so you don’t have to do so out of your business coffers (or your own wallet).
Business Property Insurance
While business liability insurance protects you against paying for the losses of others, business property insurance pays for your losses if they’re related to a qualifying event. Typically, this type of insurance covers the property owned by your business, such as real estate, vehicles or equipment and computers.
Whether an event is covered will depend on your policy, but common options include coverage for flood, wind, earthquake or fire. So, if you have this type of insurance and your office is damaged in a hurricane, your policy would help cover the costs of repairs and replacements.
Workers’ Compensation Insurance
Workers’ compensation insurance helps protect your employees. If someone is injured on the job in a work-related incident, then this coverage helps pay for medical treatment and can even ensure the employee receives some income while they’re unable to work due to the injury or illness.
Not all employers are required to carry this type of coverage. Whether or not you must carry workers’ comp depends on which state you operate out of and how many employees you have. If you’re not sure if this is a requirement — or if you’d like to consider it even if it’s not required — it’s a good idea to talk to a small business insurance broker to understand your options.
Commercial Errors and Omissions Coverage
A type of insurance many people don’t realize you can get for a business is errors coverage. People make mistakes, and when you’re under contract with a client, those mistakes can be costly. A mistake that constitutes a breach of contract could mean a big payout to the client or a sizable loss of revenue. In some cases, errors and omissions insurance can help mitigate the impact of those issues by covering some or all of those costs.
Benefits for Employees: Medical and Life Insurance
Offering good benefits for your employees fosters loyalty, ensures you can hire some of the best talent and gives people a good reason to return to the workforce after a disaster (or a pandemic) has sent them home for a while. Medical insurance and life insurance are two options you can consider offering.
Employers can sponsor health insurance group programs, taking some of the burden of cost off their staff. Options can include medical, vision and dental coverage. You can also offer life insurance options so staff members have more peace of mind when working for you.
Deciding what insurance options are right for your business can be daunting, especially when there are so many choices. Contact TrueCoverage today or start the business insurance comparison process online. Taking a step toward insurance coverage is a step toward preparing your business to weather whatever the future has to offer.