If tribal business owners need insurance, why do they sometimes neglect their risks?
Whether you’re a tribal business owner or the insurance agent that helps them handle their risks, you know there’s a plethora of “what if” situations that can keep a business owner up at night. So when it comes to tribal business owners insurance, why do some ignore their risks at policy renewal time?
Entrepreneur business owners typically think in big picture: “Here’s where I am now, here’s where I want to be this time next year.” Details and fine print often aren’t their forte. They’re also frequently pressed for time, wearing many hats for 12 or so hours per day. Consequently, they may not have a clear picture of just what coverage they DO have – and DON’T have.
Plus, they want to keep cash reserves available to spend on what will make them money – short-term and long-term. Risks and “what-ifs,” on the other hand, are ethereal: The probability of an event is quite low, they think. Consequently, some business owners (typically smaller ones) pick and choose when it comes to covering their risks.
If you’re a tribal business owner, we recommend you start the New Year with a thorough understanding as to what your insurance policies cover and what is excluded. A periodic review of insurance with your agent is highly advised so that you can discuss updates and adjustments in coverage as circumstances change.
Below is a list of various types of coverages you may want to consider including in your tribal business owners insurance, noting how they protect your company and you against harmful claims. If you have a tribal policy through Arrowhead Tribal, your customized package covers some of these risks; others can be added by your insurance agent.
Business interruption. Fires, mudslides, earthquakes, floods – if the worst happens, your property is covered so that you can repair or rebuild quickly. But what happens in the meantime, when your business remains closed and no cash is flowing in? Business interruption or business income insurance will cover your loss of income after a disaster, yet a national study shows that only 35 percent of small business owners have business interruption insurance.
Key person life insurance. Most small-to-medium businesses (SMBs) depend heavily on just a handful of employees who are essential to their business. What happens if that key person leaves, becomes ill or dies? If one or two of your key employees are so crucial to your operation that their absence could cause a business shutdown, this additional policy names your business as the beneficiary and can help you deal with the loss while you find a replacement. A recent study showed that while 71 percent say they are very dependent on one or two key people for their success and viability, only 22 percent have key person life insurance.
Cyber Liability. According to the 2016 State of SMB Cybersecurity Report, cyber hackers have breached half of the 28 million small businesses in the U.S. Many business owners have no idea which half they’re in. These facts are even more sobering: According to Thoughtreach.com, small businesses pay more than triple the cost for cyber fraud than larger businesses; nearly 60 percent of small operations go out of business within six months of a cyber attack. It’s a good idea to review your specific cyber risks with your agent to see if your coverage is adequate, and more importantly, what steps you can take to protect your operation from hackers.
Employee Practices Liability. EPLI defends you and your company against claims of sexual harassment, discrimination, wrongful termination and other lawsuits initiated by an employee. With the increased attention to #MeToo, business owners are wise to consider adding EPLI to their insurance package.
Employee Dishonesty. While typically not a problem in a small mom-and-pop shop, the larger the business gets, the more exposure there is. This addition to a tribal business owners insurance package protects the company from financial loss due to fraudulent activities of your employees, whether from theft of money or other property.
Pollution Liability. If your business runs the risk of polluting the environment by hazardous materials, this is a coverage you may want to explore. Pollution insurance covers costs for restoration and cleanup plus liability for injuries or death caused by pollution. There are several types of policies: Premises Pollution Liability protects insureds from pollution losses related to property that they own, rent or occupy. Third-party losses are covered by Contractors Pollution Liability (for builders or contractors). There’s also specific coverage for truckers hauling hazardous materials.
It’s a good idea to begin the New Year with an analysis of your current tribal business owners insurance with your agent, to ensure you’re well-positioned for growth in 2018. Arrowhead Tribal producers, if you have questions about coverage options, please contact Brett Barnsley, Managing Director Tribal Program, BBarnsley@ArrowheadGrp.com, 509.591.5109.