Understanding and building an insurance policy for your business can be complicated and time consuming, but it is a vital part of making sure you’re prepared for the unexpected.
We reached out to Dave Herod, CIC, vice president of Property and Casualty at CGI Business Solutions (cgibusinesssolutions.com) to learn more about why business insurance is so important, what kind of insurance may be needed, and how it can protect you and your assets.
Q. How do I know what types of insurance policies my business will need?
Herod: “Every business is different and has unique exposures that should be analyzed to determine the coverage needed to best protect your business. However, some common coverages that every business should have in place are Commercial Property Insurance, General Liability Insurance, Commercial Auto, Employment Practices Liability, Workers’ Compensation, Cyber Liability Insurance and Professional Liability Insurance. I always do a detailed coverage checklist to make sure that our clients have proper insurance coverage in place to align with their business risk.
“There are many different coverages to choose from and everyone has a different risk tolerance. It is a good idea to meet with a licensed insurance agent to make sure you have the correct insurance policies and limits in place to protect you and the future of the business.”
Q. How often should I reevaluate my insurance policies, and why?
Herod: “At CGI, we recommend reevaluating your insurance policy at least on an annual basis to make sure you have proper coverage in place as your business evolves. It is a best practice to review your claims history at least on a semiannual or quarterly basis. This way you have no big surprises when the renewal date comes around. Also, setting up a timeline and meeting with your agent throughout the year is a good idea to make sure everything your business requires is updated.
“Finally, you want to notify your agent or your insurance carrier to update your insurance policy whenever you have a change in business operations throughout the policy period. This way you have proper coverage in place when these changes are made.”
Q. What kind of risk management strategies would you recommend I implement?
Herod: “This is a tricky question. Implementing risk management strategies for your business can help control insurance costs and ensure a safe environment for employees and customers. Every business is different, and a risk assessment should be done to prioritize the specific needs of the business. This is something we can help with, and your insurance carrier may also have valuable resources that are included with your insurance policy services. Managing your risk can be as simple as increasing your deductibles, or as costly as hiring a fulltime specialist to run your internal risk management program.
“Generally speaking, risk management is broken up into four key parts which include risk avoidance, mitigation or prevention, risk transfer and risk retention. You would need to prioritize your risk assessment list and create a budget to implement the correct risk management strategies for your business. Everyone has a different risk tolerance and that should be considered when implementing these strategies.”
Q. Why do I need general liability insurance, and what does it cover?
Herod: “General liability insurance is a must-have for your business. It helps to protect your business assets from damages caused by bodily injury or property damage for which the business may be found liable. Maybe more importantly, the policy can also help cover attorney fees and medical expenses resulting from property damage and bodily injury claims.
“The general liability policy typical has four coverage elements: premises liability, product liability, personal injury and advertisement injuries. There are many endorsements you can add to the policy and exclusions you want to review. Not all policies are created equally and they should be reviewed on a regular basis to make sure you have the proper coverage in place for your business needs.”
