Growth of a business is inevitable, provided you have the right business strategy in place for your enterprise. Companies with less than $2 million annual operation costs tend to grow at a higher rate, as per the 2013 Pacific Crest SaaS Survey. Consequently, small and medium-sized enterprises (SMEs) have higher chances of scaling than big companies. With a high growth rate, you will have more responsibilities such as hiring more employees, expanding your premises, increasing your stock, and closing more deals. You will also need to protect the future of your business by insuring it as it scales.
Insuring Your Business as it Grows-An Overview
According to the Federal Emergency Management Agency (FEMA), about 40% of businesses collapse due to disasters and never reopen. Other causes of business failure include:
- Cash flow issues
- Property damage
It is worth noting that underinsured or uninsured businesses are more likely to fail, implying the vitality of having the right business insurance coverage. For example, if your delivery van hits and kills a pedestrian, your business liability insurance policy would cover the resulting legal costs and damages, protecting your business from this financial loss.
Keeping this mind, the most common types of business liability insurance include, among others:
- Employee Coverage – Every year, millions of workplace accidents occur in the U.S. In 2018, private industry employers in the U.S reported nearly 3.0 million nonfatal work-related injuries and illnesses, as recorded by the U.S. Bureau of Labor Statistics (BLS). The majority of these accidents occurred in the construction and transportation industries, which are generally high-risk industries on the health and safety front. This means that as your business grows, your workplace incidents are likely to grow, thereby necessitating an increase in your employee coverage plan.
- Product Liability – Depending on your product offering, you may have to carry product liability coverage to protect your business from lawsuits arising from injuries caused by your products. Recalls can happen at any time. This is especially common in the pharmaceutical industry, as reported by the Food and Drug Administration (FDA), and therefore, it’s good to be insured in the first place.
- Cyber Liability – Cybercrimes have become increasingly common in the recent past, affecting nearly any business that has an online presence. About 60% of enterprises collapse within six months of being cyber-attacked, according to the U.S. National Cyber Security Alliance (NCSA). The cyber liability coverage protects your system from cyberattacks such as phishing, malware invasion, and password attacks. With such a cover in place, you can be sure of your data’s security and your business’s confidentiality.
- Umbrella Policy – While an umbrella policy is essential for any business, it is particularly important for a growing business due to several reasons. For instance, your new employees will need employee compensation covers for protection in case of injuries. The higher the net worth of your business, the more will be the protection offered by the insurance companies. This is where umbrella liability coverage proves to be indispensable. It covers all the products, assets, employees, and aspects left out in the business liability coverage. Many business owners purchase an umbrella policy to cover the insurance gaps brought about by scaling. To purchase an umbrella insurance policy, find commercial umbrella insurance near you and get your business covered.
As your business grows, it’ll likely face bigger business-related challenges, making it necessary to insure your business as it scales. If you have more questions about insuring your business, contact our experts at Pittman Insurance Group for all your coverage needs. Our dedicated team is eager to assist with all your insurance questions and needs.