For a sole proprietor, a business owner policy package can be a convenient and cost-effective way to fully insure against risk. The right policy package, by including all the coverage you require (typically, for example, business-interruption insurance, property insurance, vehicle insurance, liability insurance, and crime insurance), requires fewer buying decisions and can save you money as compared with separate purchases of policies.
To remain at peak effectiveness, however, every insurance policy must be kept up to date with your growing business; your other business investments; your financial situation; and changes in the laws, your community, your equipment, and much else. There are some “obvious” times, of course, to consider making policy changes—a substantially different product mix, new equipment purchases, and new business locations are typical examples.
Annual review of your business policy
But the importance of an annual review is to raise considerations that may not be so obvious or may have been overlooked–as well as to bring routine information up to date. There simply may be changes in your business that you do not realize can expose you to new risks for which your policy does not adequately cover you.
A sole proprietorship is not a separate legal entity; therefore, liabilities that the business incurs can become liabilities for which you may, as owner/sole proprietor, may be responsible.
A checklist of changes that may merit policy review
Following is a checklist of some changes that should trigger a business-owner policy review. The list is far from complete, of course, and your professional insurance agent at a regular review can ensure that nothing vital is overlooked.
We will look at examples of changes in general business, employees, vehicle liability, global business, and, a somewhat newer concern, the internet:
General business changes
- Has the name of your business changed? That requires a standard policy update.
- Are you considering changing the structure of your business to a partnership, say, or LLC? The type and amounts of insurance will be different.
- Have you begun to service the products that you manufacture? That introduces possible new liabilities. Depending upon the type of business, your professional insurance agent will steer you toward coverage you need (such as a restaurant insuring against customers made ill by the food).
- Has your product mix changed–or your services? That may raise issues of product recall and product recall liability coverage. The kind of products you are selling and the services you are providing may occasion special new risks against which you should be protected.
- Have you bought new equipment? If your equipment is expensive or you acquire a great deal of new equipment, you will want to be sure it is covered by your policy.
- Have you opened new locations, closed existing locations? That can affect your property coverage.
- Has your mailing address for business changed?
- Have you hired new employees? Most employees have to be brought under your insurance coverage.
- Do you have remote workers? That could raise the issue of employment practices liability coverage.
- Has your payroll changed? There may be needed changes in workers’ compensation.
- Does your policy specifically provide coverage for hacks, viruses, and data breaches? If not, you might consider specialized covered such as cyber liability. If your firm stores sensitive or non-public information about employees or clients on your computers, servers (or in paper files), you are responsible for safeguarding that data. If a breach does occur despite your precautions, a data breach policy will protect you against loss.
- Do you have a website? Website insurance is a basic form of technology insurance. Such coverage can protect you from many risks, including unauthorized access to your website, with liability including the results of a data breach (as mentioned above). Another form of insurance that will be relevant to some businesses is media liability insurance, which protects your actual website content, slogans, logos, and even photos. Your insurance agent during an annual policy review can discuss your possible need for protection against copyright infringement, libel, and slander—vital coverage for news websites, for example.
- Do you conduct any sales online?
- Are you using new vehicles or dropped older vehicles? An update is required in your auto policy.
- Are you using your vehicles in different ways (e.g., substantially greater distances traveled or a completely different use?) If your business transports goods or people for a fee in your own vehicle, you may require commercial auto insurance. You also may need higher limits of liability because of the nature of your service.
- Have you taken on new drivers? They should be included in your policy.
- Has the time come for your business to have umbrella insurance? Such insurance represents an extension to your existing insurance policy, providing coverage beyond that of the regular policy. In that sense, umbrella insurance covers multiple categories of claims such as auto insurance and employees because it comes into play only when liability incurred on other policies has been exhausted.
- Do you have international customers?
- Are you or your employees flying overseas on business trips? If you require an employee to travel abroad on business, you have a responsibility to ensure the employee has appropriate medical and other relevant insurance and information and access to any possibly required vaccines.
- Does your supply chain now include non-U.S. sources of material?
- Have you opened a facility abroad?
A review with Harris Insurance team
At Harris Insurance Services, Inc., a Las Vegas-based insurance agency, we can work with you to address these and other questions that bear upon your financial protection as the sole proprietor of a business. With more than 100 years of combined insurance and management experience, the Harris Insurance team is a diverse group of men and women who take pride in exceeding customer expectations and in carrying into the future the firm’s “Legacy of Quality Service.”
Call us toll-free at 855-202-6611 to schedule an annual insurance review at your convenience or let us help you respond to an immediate need.
And be sure to check back regularly for information, insights, and updates on all aspects of your insurance and risk-management needs now and in the future.