Small businesses regularly face several risks that could necessitate a temporary shutdown or reduction of operations, both of which can have devastating effects on a business. One way businesses can protect themselves from the financial impacts of these occurrences is by securing business interruption insurance. This type of coverage can offer valuable assistance following a covered event. This article provides more information about business interruption insurance, including what it is and how small businesses can obtain it.

What Is Business Interruption Insurance?

Business interruption insurance, also known as business income insurance, provides a financial safeguard against temporary revenue losses and extra expenses that result from covered business shutdowns or reductions of operations. For example, if a fire or a vandal damages a company’s building and lead to a temporary closure, business interruption insurance can provide financial assistance while the building is shuttered for repairs.

Policies may also offer coverage if a civil authority (e.g., a local, state or federal governmental entity) forbids access to the business’s premises. This may happen following a natural disaster, even if the business’s property is not damaged. Each policy is unique, and businesses should work with their agent or broker to fully understand the scope of their coverage.

Why Do Small Businesses Need Business Interruption Insurance?

Small business shutdowns created by unforeseen events can have significant financial ramifications. In these circumstances, business interruption insurance can provide coverage for the following:

• Lost income. Business interruption insurance can help replace the revenue a business would have generated if it did not need to close temporarily.

• Continued operating expenses. Business interruption insurance can also provide financial assistance to cover standard, ongoing operating expenses such as salaries, taxes, utilities and mortgage, lease or rent payments that are due during the impacted period.

• Relocation costs. Business interruption insurance coverage can also offer financial assistance for moving expenses if a business needs to relocate to a temporary office.

Additionally, a specialized form of business interruption insurance known as contingent business interruption insurance offers coverage if disruptions in the supply chains create losses. For example, if property damage to a third-party vendor impacts a business’s capability to continue its operations, this type of coverage may be able to mitigate the resulting financial impact. It can typically be added as an endorsement to a standard business interruption policy.

How Do Small Businesses Obtain Business Interruption Insurance?

For small businesses, business interruption insurance is typically bundled with commercial property and liability coverage in a business owners policy (BOP). Businesses with 100 or fewer employees and revenue of $5 million or less may be eligible for a BOP that includes business interruption insurance. For businesses that are not eligible for a BOP, business interruption insurance may be available as a standalone policy or added to a commercial property policy. It is essential for businesses to review their existing coverage to determine if business interruption insurance is included.

Conclusion

Business interruption insurance can provide crucial financial assistance for small businesses if they need to temporarily shut down or reduce operations. Contact us today for more information on this type of insurance and risk management planning.

It is common for businesses such as restaurants and clubs to serve some sort of alcohol. With the availability of alcohol, also includes the possibility for issues. Fights, careless behavior or automobile accidents caused by individuals who have consumed alcohol are always a risk. While you can’t control other peoples behavior, you can make sure you and your business are protected. 

What is Liquor Liability Insurance?

Liquor liability insurance is designed to protect a business that sell or serve alcoholic beverages. This type of insurance covers damages that result from incidents by individuals who have consumed alcohol. It protects you should your clients or patrons sue your business for damages related to their intoxication. This is not something a general liability policy would cover. 

4 Reasons You Need Liquor Liability Insurance

• A method for businesses to meet legal requirements. Depending on the type of business you have and it’s location, it may be legally required to carry liquor liability insurance. The strictness of legal requirements differ from location to location. A businesses location can have a major impact on how your liquor liability insurance is priced. Be sure to speak with an insurance agent to ensure you have the correct levels of coverage. 
• Protect against unruly customers. Alcohol can alter peoples state of mind and make your patrons behavior unpredictable. This can lead to fights or other dangerous situations. Liquor Liability Insurance is designed to protect businesses from these situations and is a must for businesses that serve or sell alcohol. 
• Legal fees and court cost reimbursement. In the event of a liquor-related claim, legal fees and court costs can add up quickly. Without liquor liability insurance your business could be on the hook for the legal fees. Defense costs itself can be a huge financial burden for even the most profitable businesses. 
• Coverage for employees. Even if you require your employees to serve liquor responsibly, there’s a chance they may disregard your instructions. Liquor liability policies can cover your employees’ improper actions and better protect your business from liquor-related incidents. Also, some insurers provide training and risk management strategies to policyholders to help educate businesses and employees as well as lower overall liquor liability exposures. 

When serving alcohol, the best way to protect your business from potential claims is through proper risk management and liquor liability insurance. These policies can be complex so it is important to discuss your options with a qualified insurance broker. 

Please contact our office to talk to an agent today about your options

As an insurance buyer, you may have heard the term “social inflation.” In general, social inflation refers to societal trends that influence the ever-rising costs of insurance claims and lawsuits above the overall inflation rate. As the commercial insurance market shifts, it’s important to understand what’s currently driving social inflation.

• Third-party litigation funding—One of the factors driving social inflation has to do with increased litigation or, more specifically, litigation funding. With litigation funding, most or all of the costs associated with litigation are covered by a third party, which has increased the volume of cases being pursued.
• Tort reform—Tort reform refers to laws that prevent frivolous lawsuits and preserve laws that prevent abusive practices against businesses. However, in recent years, states have modified tort reforms or challenged them as unconstitutional.
• Plaintiff-friendly legal decisions—The overall public sentiment toward large businesses and corporations is deteriorating, and juries are increasingly likely to sympathize with plaintiffs. As a result, plaintiff attorneys often play to a jury’s emotions rather than the facts of the case.
• Large jury awards—There’s an increasing public perception that businesses—particularly large ones—can afford the cost of any damages. This means juries are likely to have fewer reservations about awarding damages. In the current environment, nuclear verdicts (awards of $10 million or more) have become more common.

While it’s impossible to completely eliminate the threat of litigation, it’s important to take the following steps to ensure your business is prepared for a lawsuit:

• Consider purchasing an umbrella policy. Commercial umbrella insurance provides financial protection above the limits of your organization’s other liability policies. It enhances existing liability coverages, helping you respond to gaps in insurance and substantial claims.
• Protect yourself from employment practices claims. Employment practices claims are common and can be particularly devastating given social inflation trends. To protect your business, review your employee handbook regularly and ensure policies related to sexual harassment, workplace violence and similar issues are communicated effectively. For additional protection, you may want to consider purchasing standalone employment practices liability insurance.
• Work with experienced insurance professionals. The insurance market is constantly evolving, and in the face of social inflation, it’s vital to have a competent insurance professional advising your business. Be sure to partner with a broker who has strong carrier relationships and knowledge of your industry.

As the insurance market changes, it’s important to understand what’s currently driving social inflation and take proactive steps to protect your business in the face of litigation. For more risk management guidance, contact us today.

A recession is a prolonged and pervasive reduction in economic activity. Generally speaking, multiple successive quarters of negative growth in gross domestic product—a monetary calculation of the market value of goods and services generated and sold during a set time period within a given country—constitute a recession.

A recession can last for several months or years. Furthermore, recovering from this state to the nation’s previous economic peak can take years, even after a recession ends. Because a recession typically results in diminished economic output, lowered consumer demand and a drop in employment, such a downturn can present various challenges for organizations across industry lines—especially small businesses.

Although a recession can’t be prevented, the strategies that HR teams implement can greatly impact whether their organizations withstand such a downturn. Specifically, HR teams can ensure their organizations are sufficiently prepared for a recession by taking steps to limit related ramifications and maintain financial stability. This article outlines how a recession impacts small businesses and explores what HR teams can do to adequately prepare their organizations for an economic downturn. We have 6 recession-proofing strategies to share with you. 

How a Recession Impacts Small Businesses

Amid a recession, organizations of all sizes and sectors usually experience decreased sales and profits stemming from changing consumer behaviors. An economic downturn may also limit organizations’ credit capabilities and reduce their overall cash flow as customers take more time to pay for products and services.

While these behaviors can threaten the financial stability of any organization, large businesses are often better positioned to weather a recession because of their substantial revenues, excess reserves and privileged access to a wider range of credit markets. Small businesses, on the other hand, may be particularly vulnerable during an economic downturn, as they generally lack the additional capital necessary to offset extended periods of loss. As a result, when a recession occurs, small businesses are more likely to have to make difficult financial decisions to avoid issues such as insolvency or bankruptcy.

Financial media website Investopedia reported that nearly 1.8 million small businesses closed their doors amid the last major U.S. economic downturn, known as the Great Recession, which took place between 2007 and 2009. Looking ahead, a recent survey conducted by investment banking company Goldman Sachs found that the vast majority (93%) of small businesses fear the nation will enter another recession in the coming months. With this in mind, now is the time for HR teams to help prepare their organizations for an economic downturn.

Tips to Prepare for a Recession

To promote financial stability among their organizations during an economic downturn, HR teams should consider the following recession-proofing strategies:

1. Revisit compensation and benefits strategies. Many employers have responded to recent labor challenges by increasing workers’ salaries, providing substantial bonuses and expanding employee benefits and perks. However, with the possibility of a recession on the horizon, HR teams may need to rethink how their organizations will address attraction and retention struggles. This may involve curtailing salary increases and reducing employee benefits. After all, recession-proof organizations tend to develop their budgets with an eye toward the future, thus requiring HR teams to revisit compensation and benefits strategies.
2. Automate internal processes. The more efficient organizations are, the more resilient they will likely be during a recession. In particular, recession-proof organizations tend to stay one step ahead by optimizing their resources and automating where possible. As such, HR teams can improve organizational productivity by automating processes and implementing new technologies. This may entail automating recruiting, onboarding and payroll operations to bolster efficiency.
3. Try to minimize layoffs. When organizations’ financial capabilities become uncertain, their immediate plans may be to reduce costs through layoffs. However, layoffs should only be considered a last resort, seeing as they can create additional risks (e.g., legal liabilities, lower morale and employee distrust) and negatively impact business operations by decreasing productivity and proficiency. Instead, HR teams may be able to minimize the need for layoffs within their organizations by implementing voluntary reduction-in-force programs or choosing to slow hiring or pause it entirely.
4. Stay transparent. The possibility of a recession can bring uncertainty. Employees will likely be concerned about their futures, the long-term viability of their respective organizations and how their work processes may change. With this in mind, HR teams need to find ways to keep employees informed without fostering their worries. Creating transparent workplace cultures can help organizations limit recession-related ramifications.
5. Prioritize employee engagement. Employee engagement can be vital leading up to and during a recession. During periods of economic uncertainty, employees are likely to feel stressed. If organizations are forced to lay off employees, the remaining employees could be asked to shoulder additional responsibilities and greater workloads. As a result, these employees may feel overworked and worried about their futures. According to industry experts, highly engaged employees can help limit recession-related labor challenges among organizations, as they are more likely to accept negative work changes and remain loyal. HR teams can increase employee engagement within their organizations by meeting with employees, listening to them and addressing their concerns. By increasing employee engagement during difficult times, HR teams can help maintain staff morale and productivity.
6. Manage health care costs. As their health care budgets shrink during a recession, searching for cost-effective solutions can allow organizations to maintain affordable benefits for employees. Implementing effective strategies to manage health care expenses (e.g., reevaluating plan designs and offerings, directing staff to cost-effective services and improving employee health care literacy) can help HR teams keep their organizations’ reduced benefits budgets intact without sacrificing employees’ needs.

Conclusion

A recession can have serious impacts on small businesses. Fortunately, by properly preparing for an economic downturn, HR teams can help their organizations be better positioned to minimize financial hardships. It is important to have recession-proofing strategies in place. 

For more resources, contact Rinehart, Walters & Danner Insurance Agency today.

Almost every organization faces commercial general liability exposures. A commercial liability loss exposure is a condition or situation that presents the possibility of an organization becoming legally and financially responsible for injury, harm or damage to another party. 

These exposures stem from the kind of work an organization performs and where that work is executed. They also encompass other aspects of business-related circumstances, activities or events that could result in harm to a third party.

Read this article to better understand the most common types of commercial liability loss exposures and potential consequences and for guidance on how the correct insurance policy can reduce the risk to organizations.   

Common Types of Commercial Liability Exposure to Know

There are five types of commercial liability exposure that every organization should know. Possible loss exposures that may affect an organization include the following:

1. Premises liability—Premises liability describes the risk an organization faces if a customer or client is injured on the premises (e.g., tripping and hurting themselves at the store). Organizations that require customers or clients to be physically present, such as retail stores and landlords, are particularly at risk for these losses and may be held liable for bodily injury or property damage.
2. Operational liability—Operations liability exposure refers to the possibility that an organization will be held liable because of bodily injury or property damage that occurs as a result of their ongoing (as opposed to completed) operations. For example, imagine a contractor working on a client’s home. During the course of their work, an employee from the contractor drops a tool, striking a passerby and causing bodily injury and property damage to the home itself.
3. Products liability—Products liability refers to the loss exposure an organization faces as a result of manufacturing, distributing or selling an unsafe or defective product. Any organization that makes or sells products is at risk. Associated injuries may occur virtually anywhere in the world once an organization’s products have been manufactured or sold.
4. Completed operations liability—The completed operations liability exposure refers to injuries or damages incurred by a third party due to work (including construction work) that has been finished, turned over to the purchaser or client, and/or put to its intended use. For example, an electrical fire caused by faulty wiring at a completed construction project would represent a completed operations exposure for the contractor who completed the work. It should be noted that injuries or damages arising out of completed operations can occur after a business’s relationship with the injured party has ended.
5. Contractual Liability—Organizations take on contractual liability loss exposures when they enter into a contract. By agreeing to contractual terms, an organization becomes liable if the other parties involved in the contract believe an organization has not fulfilled its obligations under the agreement.

Potential Consequences of Liability Exposures

In the event of a commercial liability loss, organizations can face a variety of potential consequences, such as:

• Damages—If a court deems an organization responsible for a loss, that organization may be held financially accountable for paying damages to the harmed or injured party.
• Defense costs—The organization may have to pay legal defense costs and the costs associated with the claim.
• Reputational harm—Due to general liability losses, organizations may experience reputational harm, including but not limited to the loss of business, decreased employee retention, and a loss of consumer loyalty and investor trust.

Although commercial liability loss exposures are a risk for every organization, the severity of the consequences can be alleviated with proper insurance policies.

Commercial Liability Insurance

No matter how careful an organization is, there will always be risks associated with commercial liability loss exposures. Therefore, the best way to protect an organization is to purchase commercial general liability coverage (CGL).

CGL policies are designed to cover an organization from liability claims for bodily injury and property damage to third parties. CGL policies have three standard coverages:

1. Bodily injury and property damage—This coverage protects organizations from the legal liability arising from bodily injury and property damage stemming from an organization’s premises or operations.
2. Personal and advertising injury—This aspect of CGL policies protects insureds from liability stemming from accusations of libel, slander, false arrest, copyright infringement, malicious prosecution, theft of advertising ideas and invasion of privacy.
3. Medical payments—Medical payments coverage includes payments for injuries sustained by third parties that are caused by an accident at the insured’s premises or the insured’s operations. Unlike bodily injury and property damage coverage, medical payments coverage can be triggered without legal action and is designed to settle smaller, less serious medical claims without litigation.

Conclusion

Consult a trusted insurance professional for further guidance on how to protect your organization from commercial liability loss exposures.

In recent years, organizations of all sizes and sectors have become increasingly reliant on workplace technology and digital systems to conduct their operations. Nevertheless, utilizing such technology carries additional exposures and liabilities. That’s why it’s crucial to secure adequate cyber coverage.

Having a cyber insurance policy in place can provide protection against financial losses that may result from a range of cyber incidents, including data breaches, ransomware attacks and phishing scams. Especially as these kinds of incidents continue to surge in both cost and frequency, organizations simply can’t afford to ignore the importance of cyber coverage.

Specific cyber insurance offerings differ between carriers. Furthermore, organizations’ coverage needs may vary based on their particular exposures. In any case, cyber insurance agreements typically fall into two categories—first-party coverage and third-party coverage. It’s best for policyholders to have a clear understanding of both categories of coverage in order to comprehend the key protections offered by their cyber insurance. This article outlines the primary components of a cyber insurance policy.

First-party Coverage

First-party cyber insurance can offer protection for losses that an organization directly sustains from a cyber incident. Types of first-party coverage include:

• Incident response costs—This coverage can help pay the costs associated with responding to a cyber incident. These costs may include utilizing IT forensics, hiring external services and restoring damaged systems.
• Data recovery costs—Such coverage can help recover expenses related to reconstituting data that may have been deleted or corrupted during a cyber incident.
• Business interruption loss—This coverage can help reimburse lost profits or additional costs incurred due to the unavailability of IT systems or critical data amid a cyber incident.
• Contingent business interruption loss—Such coverage can assist with expenses stemming from business interruptions caused by a third-party cyber incident (e.g., a supplier, vendor or utility).
• Cyber extortion—This coverage can help pay costs associated with hiring extortion response specialists to evaluate recovery options and negotiate ransom payment demands (if applicable) during a cyber incident.
• Reputational damage—Such coverage can help recover lost revenue related to higher customer churn rates and reduced sales resulting from poor publicity following a cyber incident.
• Financial theft and fraud—This coverage can help reimburse direct financial losses stemming from the use of workplace technology to commit fraud or theft of securities, money or other property.
• Physical asset damage—Such coverage can assist with expenses resulting from the destruction of hardware or other physical property due to a cyber incident.

Third-party Coverage

Third-party cyber insurance can provide protection for claims made, fines incurred or legal action taken against an organization due to a cyber incident. Types of third-party coverage include:

• Data privacy liability—This coverage can help recover the costs of dealing with third-party individuals who had their information compromised during a cyber incident. These costs include notifying impacted individuals, offering credit-watch services and providing additional compensation.
• Regulatory defense—Such coverage can help pay fines, penalties and other defense costs related to regulatory action or privacy law violations stemming from a cyber incident.
• Multimedia liability—This coverage can help reimburse defense costs and civil damages resulting from defamation, libel, slander and negligence allegations associated with the publication of content in electronic or print media. Multimedia liability coverage can also offer protection amid copyright, trademark or intellectual property infringement incidents.
• Network liability—Such coverage can help recover expenses related to third-party liability concerns that may arise from a cyber incident affecting IT networks. Network liability coverage can also provide protection in the event that cybercriminals pass through IT networks to attack other parties (e.g., customers, investors or suppliers).
• Technology errors and omissions liability—This coverage can reimburse costs associated with third-party claims alleging technical service or product failures, including claims filed in response to a cyber incident.

For More Information

Overall, it’s evident that cyber insurance has become increasingly vital for organizations across industry lines. By securing proper coverage and understanding the key elements of their policies, organizations can stay properly protected against various cyber threats.

For additional insurance guidance and solutions, contact us today.