Insurance for Business Resiliency

Insurance premiums present challenging decisions for business. There are so many certain, reoccurring expenses that press the bottom line, making it very difficult -- especially for smaller businesses -- to spend for “maybes.”

We are accustomed to paying auto premiums as the most practical way to provide required financial responsibility, in order to operate a motor vehicle.

With the exception of Workers Comp.* it is not against the law to operate a business without protective insurance products.  However, if any of an array of unfortunate circumstances occurs, insurance protection could prove vital in sustaining your company. 

No question, business insurance products are a major expense, so get more than one quote and select higher deductibles as ways to control cost.  Ideally, you will find robust, flexible coverage to protect your business.

Protection for man-caused events such as crime (fraud, embezzlement, robbery, shootings, terrorism, IT security breach, etc.,) is available.  Events delivered by mother nature -- even the catastrophic -- are primarily unavoidable. Major earthquakes, floods and wild fires can deliver enormous damage.

Focusing upon natural disaster, two insurance products aid recovery and can be the difference between getting back to business, or closing the door:

Earthquake Insurance.  In almost all cases, earthquake insurance is provided by means of an endorsement to a standard business policy. However, in some cases it can be provided as a stand-alone contract. Obtain several quotes; a 10 percent deductible is the most popular. A higher deductible, up to 15%, reduces the cost. This insurance is purchased as a premium per $1,000 of valuation.

An earthquake could set your business on fire or cause flooding by broken pipe(s).

Utah is earthquake country -- 90% of the state’s population live and work along, or near fault lines. This is one risk that you know will happen. Scientists tell us we are 50-years overdue for a major quake.  Since February 2019, Utah has been experiencing an unusually high number of “feel-able” quakes. This is NOT a good sign. 

Flood Insurance.  Whether you are a tenant or a building owner, you can reduce risk of losing your business investments, assets, equipment, supplies due to flooding by having commercial flood insurance. If your business property has a value above National Flood Insurance Program (NFIP) limits of $500,000 for your building and up to $500,000 for contents, excess insurance coverage to rebuild is available. This additional coverage may include protection against business interruption. 

A number of powerful snowfalls in early 2019 brought plenty of snow to Utah’s mountain ranges. The state’s snowpack totals are averaging more than 130 percent of normal, and as spring temperatures increase, the potential for flooding increases with it.

Fire can be caused by accident, deliberate malicious act, faulty building systems, lightening and part of a natural disaster.   

Business Interruption Insurance covers the loss of income due to disaster-related closing of your business or the rebuild period after a disaster.  This insurance can keep your business alive.  Some business interruption policies do NOT exclude earthquakes as covered events -- but check with your insurance professional. 

Business Crime Coverage protects your business from losses resulting from employee dishonest actions... theft, robbery, forgery, extortion, embezzlement, computer fraud, etc. 

Liability Coverage protects you from various claims including bodily injury, property 

damage, personal injury, etc.  There is also Product Liability insurance.  For businesses that require an extra layer of protection against legal claims that could be ruinous, there is Umbrella Coverage.

Another common coverage would be Key Man life insurance to protect the business from the loss of an important principal.  

A common endorsement for broken pipes might be useful.

* Workers Compensation: All employers with at least one employee must carry coverage. Subcontractors, independent contractors, and their employees must also be covered (unless they're independent enterprises).  Construction businesses are required to have workers' compensation insurance.  Injury to employees at work by earthquake effects is a covered loss under workers' compensation insurance.

NOTE: In addition to insurance products, every business needs to have emergency supplies and an emergency plan that is practiced, with all employees, annually, or better -- practice semi-annually, during both the hot and cold seasons.