Have Small Business Clients? Learn How to Optimize Their Risk Management
Small businesses face a variety of exposures that continue to evolve in both traditional and niche markets.
Insurance brokers are tasked with conveying the importance of insurance to these businesses and finding the optimal policy for their clients’ business risk management plan. ProWriters makes it easier with advanced underwriting services and superior insurance products. Learn about the importance of insurance for small businesses risk management and how to mitigate the many types of business risk.
Explaining to Clients: What is Risk Management?
Risk management is the process of proactively taking steps to anticipate and minimize the financial impact of potential losses and exposures. This is particularly important in business, where companies face a variety of internal and external risks. Insurance coverage is an important part of a comprehensive risk management plan that covers the various types of business risk allowing businesses to transfer risk.
Why Small Businesses Need Insurance Coverage
Small and medium-sized businesses in particular need to include insurance as part of their risk mitigation plan. Small businesses have a unique set of exposures that makes insurance one of the most important risk management solutions they can have. Small business owners should get insurance because they have:
- More personal financial exposure
In the event something goes wrong, small business owners often find that their personal finances take a hit—which in severe cases can be difficult if not impossible to recover from fully.
- More personal legal liability
In the event of litigation, small business owners without the right insurance coverage often have to pay all legal costs out of pocket. They may also be personally held liable in a civil lawsuit, which they would be unprotected from without insurance.
- Staff limitations
Large corporations have teams of people who can respond to crises. Small businesses typically don’t have that luxury, which can make an already bad emergency situation even worse. Insurance helps small businesses manage the fallout while offering crucial material support.
Furthermore, by including insurance in their risk management plan, businesses can build confidence and trust among customers and investors. In many different ways, insurance coverage is critical for small business risk management.
Small Business Risk Management: Liability Insurance
At a minimum, small and medium-sized businesses need a few different types of insurance included in their risk management plan. One of the most important of these is liability insurance. While there’s a wide range of liability insurance options available on the market, these are the ones a small business would most likely need to consider:
- Cyber Liability Insurance
Cyber liability insurance is more important than ever before. Cyber insurance today covers a wide variety of digital exposures and can be tailored for any industry. While some think only large businesses need cyber liability insurance, that’s not the case; in fact, experts say small and medium-sized are more attractive targets for cyber criminals because they are viewed as less secure and easier to exploit.
- Errors and Omissions (E&O) Liability Insurance
This type of liability insurance protects businesses from a variety of exposures, including negligence claims made by customers and damages awarded in civil lawsuits. E&O insurance protects businesses from taking on the full cost of these exposures. Although this is a complex insurance product, ProWriters makes it easy for agents and brokers by breaking down the differences in exposures between business classes so they can pick the best E&O providers for their clients.
- Directors and Officers (D&O) Liability Insurance
D&O exposures can be extremely costly for small businesses. This type of liability insurance protects individual directors and officers in the company from any liability that comes from management. ProWriters focuses on specific areas in D&O insurance to help agents and brokers with risk mitigation for their clients. D&O can also include coverage for Employment Practices claims as well as crime claims.
To help you determine the best business risk management coverage for your clients, check out ProWriters’ exceptional underwriting services, which offers product expertise for brokers seeking alternatives to traditional markets. To learn more about how ProWriters can help you and your clients, schedule a call with our experts today.