By Mark Genovese
“Owning a small business comes with
risk and responsibility,” said Beth Sullivan,
commercial marketing manager at Jaeger &
Flynn Associates in Clifton Park. “It’s critical
that business owners protect themselves as
much as possible from financial damage.”
Several types of policies are available and
packages can be customized to meet an
individual business’ needs.
Every business works hard to estimate
its future expenses and costs. “But unfortunately,
liability isn’t often one of those
considerations,” said David Fragomeni,
owner of Fragomeni Insurance & Financial
Services in Saratoga Springs.
“A small business owner needs to take a thorough look at the risks and dangers – both physical and financial – to customers, employees, and the business itself. What they’re buying is essentially legal representation, for the insurance company’s legal division to defend them,” he said.
“The cost of coverage is relative to the amount of risk associated with the business,” Sullivan said. “It’s important that business owners and managers be aware of what circumstances are not covered by their policies, and make informed decisions when deciding whether to purchase additional coverage or not if it’s available.”
“The insurance world is vast and can be somewhat intimidating,” Sullivan said. They should consult with a licensed insurance agent or broker before deciding which type of policy is the right fit.
To start, New York state also requires workers compensation coverage and disability coverage. After providing for this, an insurance company’s underwriters will help a business owner consider several risk factors — such as location, building type, and fire protection. They should also consider the nature of the business, number of employees, and remuneration.
A business should consider general liability insurance, which offers protection against legal damages typically caused by innocent oversights and mistakes made by the business owner or their employees.
“An average businesses on Broadway might only have need for basic coverage,” Fragomeni said. “But we always recommend additional liability coverage because there’s always the unexpected. This umbrella/ excess liability coverage will help protect against any loss that might be attributed to a business, whether the claim is legitimate or not. ”
Lawsuit awards continue to rise,” Fragomeni said. “And should the underlying liability limits for a general liability or commercial auto policies be exhausted, an umbrella/excess-liability policy can provide that additional layer of protection.”
Additional specialty lines policies are important, depending on the nature of the business. For example: A business that primarily conducts its transactions over the internet — and therefore handles particularly sensitive information on clients — should consider cyber liability coverage, experts say.
Errors and omissions coverage is required for professionals such as attorneys and medical professionals. Directors and officers coverage, as well as employment practice liability coverage are becoming more prevalent due to workplace harassment and discrimination litigation.
Pulling all of these factors together is a business owner’s policy package. This is a cost-efficient policy that offers property, general liability, vehicle, business interruption, and several other types of coverage that are specific to small businesses, according to the agents.
Insurance agents can help out in other ways. They can be involved as a consultant in reviewing the business plan, financial, and risk assessment to assess the likelihood of claims. Agents can pre-qualify a business and have the expertise to determine which insurance company would work the best, based on the businesses’ particulars. An independent agency can pull policies from several insurance carriers in order to tailor a specific package. Policies can include property, casualty, and liability insurance.
“Agents are competent in reading and explaining insurance policies, so clients won’t need a law degree to understand what’s covered.” Sullivan said. They can spot gaps in coverage, such as co-insurance clauses and no-business interruption coverage. “Gaps like these can put a business out of business.”
Jaeger & Flynn Associates can be reached at 373-0069. Its website at jaegerflynn.com. Fragomeni Insurance & Financial Services can be reached at 584-4200. Its website is www.fragomeni-insurance.com.