5 Insurance Policies Your Business Should Consider

Internet security breaches, employee lawsuits and environmental damage to company assets happen to small businesses every day. While most companies opt to purchase basic business owner’s package policies as part of their insurance program, the standard coverages offered as part of these packages (general liability, property, business interruption, to name a few) and state-mandated coverage such as workers’ compensation typically do not include protection against some of these common risks that businesses face these days. The following “stand-alone” policies should be strongly considered by every business owner, in addition to the basic lines of coverage. It’s important to work with an insurance advisor who can educate you on the best options available in the marketplace and who is well versed in any policies that may exist that are unique to your line of business.

1. Employment Practices Liability Insurance (EPLI):

Explanation of coverage: EPLI coverage provides protection against claims by employees for certain intentional and negligent acts related to employment practices including allegations such as sexual harassment, discrimination in the workplace, negligent supervision, defamation and wrongful termination, to name a few.

Claim example: An employee sues for sexual harassment after a colleague allegedly makes a series of lewd comments to her. Coverage can be extended to any third party.

2. Environmental Insurance:

Explanation of coverage: An environmental insurance policy provides protection against financial loss arising from a wide variety of environmental threats including pollution, mold, asbestos, etc. The majority of property and casualty policies do not insure this risk. A strong integrated environmental risk management plan should include environmental clean-up cost, bodily injury, property damage, legal defense, business interruption, cleanup cost cap and collateral value loss reimbursement.

Claim example: Several employees who work for you are diagnosed with a disorder as a result of the poor indoor air quality in your office, causing them to take a leave of absence.

3. Crime/Employee Dishonesty:

Explanation of coverage: Crime policies (also referred to as fidelity bonds) offer coverage for dishonest acts such as theft or forgery by an employee, as well as fraudulent acts by any party resulting in a loss.

Claim example: An employee diverts a substantial amount of company funds over a long period of time into a “ghost” bank account.

4. Privacy & Internet Coverage:

Explanation of coverage: A standalone coverage that is new to the marketplace. This type of policy covers losses due to privacy breaches.

Claim example: An employee accidentally leaves his company laptop computer on at a local coffee shop, where it is then stolen and private company information is accessed and revealed to the public.

5. Directors’ & Officers’ Liability Coverage:

Explanation of coverage: Often referred to as D&O, this coverage protects against claims made by shareholders, employees and other third parties for fraud, anti-trust, unfair trade practices, defamation and breach of contract against board members and/or the company itself.

Claim example: A company founder sues the directors, alleging his stock was diluted through private financing in which the founder was not able to participate.