Meeting Unique Business Insurance Needs

The Small Business Administration’s Office of Advocacy states that 99.9% of all American businesses are small businesses. While there are some commercial insurances that every business may need, whether small or large, some businesses will also require specialized products to meet their business insurance needs. Understanding which products are required can be difficult because they are specialized to your unique industry and needs. Often times even businesses within the same industry may require different products.

What Are Specialty Products in Insurance?

Some insurances are standard for all businesses, or all businesses that meet certain conditions. Workers Compensation insurance may be among the most familiar examples and is a regulatory requirement for any United States company that maintains a roster of employees above the threshold set by each state. Most businesses need general liability and property insurance, which can often be combined in a business owner’s policy. Beyond these standard types of insurance are the ones that are only needed in certain industries or by businesses with specific circumstances. These are specialty products.

These specialized products offer coverage plans that are specially designed for businesses that need specific protections. Their policies often offer coverage for scenarios the business may not normally be able to get coverage for, such as high-risk holdings or properties or equipment that are not covered by a typical insurance policy. However, not all businesses will require specialty insurance or may only require certain kinds, such as needing flood insurance in a flood-prone area.

What Is a Specialty Line of Business Insurance?

There are a variety of specialty lines of business insurance to meet the business insurance needs of the many different types of businesses across various industries. A few examples of specific specialty lines include:

• Cyber Insurance: These policies cover financial losses incurred due to a data breach or cyber-attack. This often assist with remediation costs, such as crisis communication, legal services, investigations, and refunds to customers caused by the loss.
• Professional Liability, also known as Errors & Omissions (E&O) insurance: This policy offers coverage for mistakes or negligence related to the services provided by professionals such as attorneys, accountants, and others whose errors could have an enormous financial impact on their clients.
• Management Liability: This coverage is often a combination of several types of coverage, including Directors & Officers (D&O) Liability, Fiduciary Liability, and Employment Practices Liability (EPL). EPL insurance may be important for those businesses with employees, as it covers things like sexual harassment, discrimination, wrongful discipline, wrongful termination, and failure to employ or promote, according to the Insurance Information Institute (III).

What Other Specialty Insurance Does a Company Need?

The specialized products a company requires will vary based on its unique business insurance needs. One industry requirement may not be necessary in another industry, so it is critical that companies thoroughly research their needs before purchasing any specialty policies.

Some specific specialty insurances that may be needed could include:

• Construction Defect (if in the construction industry)
• Product Liability (if manufacturing or selling products)
• Employment Practices Liability (EPL)
• Commercial Auto – Fatalities and High Exposure (if driving is a part of the business)
• Excess & Surplus (E&S) (covers businesses with high risk or an adverse loss history that makes it hard to get coverage in traditional markets, such as casualty insurance in high-risk industries or professional liability within high-risk industries.)
• Flood in flood-prone areas or places where there are hurricanes
• Wind and/or Hail protection
• Marine insurance for businesses with boats and marina insurance for businesses that own marinas

What Are the Benefits of Specialty Insurance?

Some coverage may seem unnecessary, but there are many benefits to having specialty insurance. These specialized products offer specific benefits that may not be available with typical insurance products.

Assists To Attract and Retain Top Talent

When people are job hunting, they are not just looking for the employer with the highest wages or the most benefits. Top employees who will work hard and be loyal are looking for employers who instill confidence and offer peace of mind. Employers can take a step in this direction by purchasing specialty insurance that shows this top talent that they will be protected, and the business will not fail if someone should file a lawsuit or claim against the company.

Protects Against Damaging Effects of Lawsuits and Claims

Specialized products that meet a company’s unique business insurance needs can also protect against lawsuits and claims. Because these specialty products often cover aspects of the business that are not covered by traditional insurance products, they are also often parts of the business in which the business would be vulnerable to large losses if they lost a lawsuit or claim against them. These products ensure that, if a lawsuit or claim is filed and the company loses, they can pay the settlement without the business being forced to file for bankruptcy or close their doors.

Keeps Business Running and Profitable

Some specialty insurance products can help a company keep operating when things have happened that might otherwise require them to temporarily close. Flood or wind and hail insurance is a common example that may help a company quickly repair damage from a flood or storm damage, instead of needing to shut down operations until they can find the money to repair the damage. In some cases, it may also allow the business to temporarily or permanently relocate if the damage is severe enough. This coverage may also help the business quickly replace products that were damaged, so they do not have a reduced inventory to work with.

Ensures Business Conforms With Legal Requirements

Even if the government in a business’s operating jurisdiction does not require a business to purchase a specific type of specialty insurance, there may be other, non-governmental reasons why it is required. If a business rents space from a landlord, the landlord may put in the lease that a certain type of insurance is required. If the business needs to finance something, the loan agreement may call for a specific insurance. By having these policies in place before someone else requires them, a business can ensure they are anticipating and conforming with expected standards, which can keep things moving along.

Provides Credibility

Many times, a client will ask if a company is “licensed, bonded, and insured.” Some companies also use that phrase as part of their advertising. That is because those three qualities can provide credibility to a business. Having the right insurance policies shows clients that the business is a real, reputable, and reliable business. This increases the prospective clients’ willingness to do business with them.

Aligns With Contracts That Require Specialty Insurances

Building and equipment leases and loan agreements are not the only contracts that may require a business to have a specific type of insurance. Some clients may also require specialty insurance before working with a business. By having relevant specialty insurance policies already in place, a business shows they are competent and prepared to work with those clients.

Do You Have Questions About Specialty Insurance for Your Unique Business Insurance Needs?

Determining which specialized products you may need for your business can be confusing, particularly if you are just getting your business started. However, having the right products in place to meet your business insurance needs can give your business credibility and peace of mind. Having protection for high-risk holdings or industries can allow you to conduct business without wondering how you will pay the loss if the worst should happen.