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Owning a business can be a very exciting and rewarding experience, but it is crucial that you do not overlook the risks that come along with it. Having proper financial protection gives family-owned businesses peace of mind and allows them to focus on what is important — moving the business forward.

Although the government requires most businesses to provide Workers Compensation insurance to cover employees in the event of an accident or injury, there are other forms of insurance that business owners should carry to protect their investments. Property and Liability insurance should also be included in any business plan, providing complete coverage of the business’ physical assets, such as inventory and equipment, as well as Liability coverage in the event of a lawsuit.

Property Insurance. There are different ways property insurance policies are written. The policy can cover the property’s actual value, which is the replacement cost adjusted for depreciation, or it can cover the replacement value alone, without any depreciation adjustments. Policies can also be written to cover hard-to-replace items, such as artwork or other unique items. In general, small business property insurance covers damage and loss from fire, smoke, wind, and hail, and damage from auto accidents, vandalism, and civil unrest. Supplemental insurance can be purchased to cover more specific risks, such as earthquakes, hurricanes, and floods. Depending on the needs of your business, policies can be tailored to cover everything you have worked so hard for.

Before purchasing an insurance policy, be sure to conduct a full inventory of all of the business’ physical assets, in order to determine their value and which items are worth insuring. Some items might not be covered through a basic policy, so make sure your insurance protects everything you value, including such items as supplies and office furniture, in addition to the building.

Liability Insurance. Carrying Liability insurance safeguards business assets from lawsuits, both legitimate and frivolous. When your business is sued, your hard work and livelihood are at stake, but carrying Liability insurance can cover settlement costs, court fees, and the cost of your legal representation. Privately hiring a defense team is incredibly expensive and without insurance, you could stand to lose everything your business has earned. Liability insurance is like a safety net that prevents you from taking a giant loss in the event of a lawsuit.

Basic Liability insurance will not cover business owners from certain claims, such as sexual harassment, employee discrimination, wrongful terminations, or claims against nonperformance of work. This is why it is also important to carry some form of performance insurance as a surety bond. Purchasing Employment Practices Liability insurance, or EPLI, can protect business owners from employee-based claims, such as sexual harassment or wrongful firings.

Business Owner Policies (BOP). In an effort to make things easier for business owners, insurance companies have bundled Liability and Property insurance into a single policy, known as a Business Owners Policy (BOP). Again, you are encouraged to read the fine print, because even BOP coverage might not protect everything you need it to. Additional coverage might be required, and should be purchased in addition to a BOP.

Whatever the size of your business, consulting with one of our professionals can help you decide which policies are best for your situation. Do the responsible thing and protect your future with comprehensive business owners insurance.

There were 325 data breach incidents and 8,320,325 people exposed to data theft from the beginning of 2010 through late June, according to the Identity Theft Resource Center. This amounts to almost two breaches every day involving two of every 100 Americans. When thieves steal personal information, the victims look for someone to blame; the target is usually the person or company who had their data to start with. Businesses that suffer data breaches involving the possible theft of others’ information can expect to receive lawsuits. Legal actions taken so far have not produced sizable awards, but they have produced some guidance from the courts.

Some plaintiffs’ actions have failed because they could not prove that a data breach actually harmed them. A federal appellate court ruled that only one of three plaintiffs in a particular case had a cause of action against a company whose computer servers were stolen. That plaintiff had suffered an identity theft; the court ruled that it was possible that the server theft caused the identity theft. Because the other two plaintiffs could not show that the server theft harmed them, the court said that they had no cause of action. Likewise, a federal court ruling on an Indiana case said that a data breach alone was not what state law defines as a “compensable injury.” In both of these cases, plaintiffs sought recovery for the cost of credit monitoring services, but the courts ruled that these costs were not compensable damages.

Plaintiffs had no more success in a class action suit against supermarket chain Hannaford following a three-month data breach that exposed millions of credit card numbers and led to 2,000 incidents of fraud. Claiming that the chain had violated an implied contract to protect their data, the plaintiffs sought compensation and an injunction ordering Hannaford to disclose the breached data and to pay for credit monitoring services. However, the court ruled that Hannaford had no implied contract with its customers and owed no compensation to those affected customers who did not have fraudulent charges on their accounts. It also ruled that customers whose credit card issuers removed fraudulent charges from their accounts were not entitled to damages. Finally, the court denied the request for the injunction because the plaintiffs had closed the affected accounts.

Banks that reimbursed customers affected by a 2005 data breach involving TJX Corp. had more success in court. The company, which operates popular retail chains, suffered the theft of 45 million customer records from its systems. The banks removed fraudulent charges from their customers credit card accounts, then filed a class action suit against the company. TJX eventually settled for more than $40 million.

Many business owners see these large-scale events as the problems of large corporations, any business that keeps records of confidential customer information, such as credit card numbers, has a serious exposure to this type of loss. Some insurance companies now offer Security Liability insurance to protect businesses against being held liable for harm resulting from a data breach. One company’s policy covers a business’ liability resulting from a failure and inability of its computer security system to prevent a computer attack or to minimize its effects. It covers only losses resulting when a source outside the organization causes a data breach.

Since virtually every organization keeps some customer information on its computer systems, every organization, regardless of size, should at least consider purchasing Security Liability insurance. Our professional insurance agents can suggest coverages appropriate for your specific exposures and identify insurance companies that can provide them at a reasonable cost. Businesses must do everything they can to protect customer data, but if things go wrong, the right insurance will help the business survive.

When just about any business these days is deeply involved with social media, it is apparent that these sites and tools have become mainstream. Indeed, it is hard to imagine that their use will not grow in coming years. They bring businesses to the places where their customers are and enable conversations. However, as with anything, the use of social media comes with risks of which every business should be aware.

The great thing about social media is that a business’s customers can talk about it. The bad thing about social media is that a business’s customers can talk about it. When they’re happy, social media is a boon, but when they’re not, it can be a public relations nightmare. A disgruntled customer can post a negative comment on Twitter or Facebook at 3:30 p.m. on a Sunday, and by 4:00 p.m. a few million people might have seen it or passed it on. There is little a company can do to control the spread of this kind of message.

A major concern with social media is that a business might unintentionally violate local laws and regulations, since messages on Facebook and similar sites spread all over the world. Among the areas of concern are:

• Advertising — Businesses might land in hot water if statements on social media sites are false or misleading, if they improperly influence bloggers to write favorably about their products, or if they improperly use user-generated content.
• Defamation — Not all countries defer to free speech rights to the extent the United States does. A statement that U.S. law might not consider defamatory might be just that under the laws of another country.
• Privacy — Social media sites are easy to use. With little effort, employees can publicly reveal trade secrets, information about products under development, troubles within the business, or even private information about employees.
• Employee use — Employees can create a “hostile work environment” (as U.S. law defines that term) by making inappropriate and derogatory posts about their colleagues.
• Securities disclosure — If employees post information that could appear to be an attempt to manipulate financial markets or that appears to be insider information, securities regulators may take action against the company.

There are a number of steps a business can take to manage social media risks, including:

• Developing and enforcing a company policy for using social media
• Designating an individual as the point person for social media
• Learning the requirements of every country’s laws and regulations
• Reviewing insurance policies with an eye toward social media risks and purchasing additional insurance to fill in gaps

Social media sites and tools are important ways for a company to market and brand itself. However, they must be used with care and forethought. With the proper controls in place, a company can reap the benefits of social media while minimizing the risks.