Liability Protection

If you’ve put off updating your company’s liability insurance until the economy improves, there are some insurance agents who’d like to speak with you. It’s common for businesses to have ill-fitting coverage. Many, if not most, companies are missing critical policies that could protect them against a financial disaster. At the same time, they’re often shelling out big bucks for low-deductible coverage in areas that are less crucial. As unlikely as it may seem, revisiting your business liability insurance should be a major priority right now.

In order to make appropriate recommendations, insurance agents need to understand your business. “If you’re a manufacturer, we’ll start by asking, ‘What kind of product do you make? Where does your product go? Does it go to a consumer? Or is it a part that goes to an automobile manufacturer, and then their consumer buys that product?’” says Jeff Bowers, senior vice president of marketing at Associated Financial Group, an insurance company in Minnetonka. “If you can follow where the product is going to go, then you can start to determine what type of exposure that insured [company should] have.”

A lot of the questions are designed to suss out the degree of control you have over your circumstances. For example, a single retail location is much more manageable and predictable than a chain of department stores, and has less foot traffic per day. At the same time, though, a small retail shop has fewer assets that could be targeted in a lawsuit. Other questions are intended to find out the extent to which you have outsourced your risk: Are your vendors required to carry liability insurance for their products? Are you indemnified by your contracts? Your agent should be asking about your practices, your contacts, your risks, your long-term plan.

Bare-Bones Basics

Regardless of what your business does, you almost certainly should be carrying a general liability policy. “Mainly, it covers bodily injury and property damage,” says Phil Rosenbloom, managing director of Bearence Management Group, an insurance company in Minneapolis. “If you hurt somebody or damage somebody’s property, you’re covered.”