An estimated 22% of small businesses with under 100 employees are uninsured.* In the event of a loss, that lack of protection has the potential to shut down a business, temporarily or forever.
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*Insurance Services Office, Inc. Used with permission.
How would your small business fare through some common loss scenarios? Take our three-question quiz to find out, and then contact a Travelers agent for expert advice on your insurance needs.
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Is Your Small Business Adequately Insured?
Joe and his family have been in the furniture business for as long as Joe can remember. Their family legacy passed from grandfather to father to son, offering a range of home furnishings to their community. Then a tornado hit, wiping out Joe’s entire delivery fleet. To make matters worse, his No. 1 delivery worker threw out his back while on the job. Joe’s family business was in jeopardy.
All of the above
Business Owner’s Policy (BOP)
General liability OR umbrella insurance
Auto and workers compensation insurance
Which insurance product or products does Joe need to keep his business viable?
The insurance coverages that would help Joe in this scenario would be auto physical damage and workers compensation.
While a BOP offers broad coverage for things like fire, theft, loss of income and liability, it would not cover property loss of company vehicles. Plus, it wouldn’t cover workers compensation for an injured worker’s medical care costs and lost wages.
BOP would cover liability, business income and the building itself (property coverage). It would not cover the auto fleet.
This kind of insurance, while helpful if he caused the incident and damaged a third party’s property, would not help Joe here. He is not liable. It is property damage to his owned autos, not property damage to a third party as a result of any action on Joe’s part. Umbrella insurance follows the liability coverage, an extra liability limit over the underlying liability limit (no property damage coverage for the insured’s own property).
Workers compensation insurance will come into play to cover medical care costs and lost wages for Joe’s injured employee.
Joe needs business auto insurance as well as workers compensation insurance. Auto physical damage insurance will come into play to pay for the damage to the insured autos due to windstorm, as well as other perils.
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Luckily Joe took a proactive approach. Before the loss, he had called his independent Travelers agent, who pointed out Joe’s insurance shortcomings and explored other coverages to help further protect the family business and keep it humming for future generations.
Scenario #1 | Retail | Joe’s Furniture
INCORRECT!
CORRECT!
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Scenario #1: Retail | Joe’s Furniture
Sometimes, even law firms face lawsuits. Case in point: Congdon & Associates, a four-person law firm, found itself in court defending several claims. One of Congdon’s junior attorneys, while driving to a regional courthouse, momentarily took his eyes off the road. The distraction caused a huge accident. The other driver and his passengers were seriously injured, and the other driver sued the firm. A $7 million verdict was on the table.
Auto insurance
Auto insurance and umbrella insurance
Workers compensation insurance
The coverages that would help the law firm here are auto liability and umbrella insurance. Failing to keep your coverages up to date with all the risks your business has could put your organization at risk.
As legal professionals, the principals at Congdon & Associates are no strangers to court case volatilities and nuclear verdicts. Anticipating those risks, they had wisely increased their auto liability and umbrella policy limits to cover worst-case scenarios like the one described here.
Workers compensation insurance would have come into play here if the junior attorney who caused the accident had been injured. But because he was unharmed, workers comp coverage did not help Congdon & Associates.
Primary auto insurance alone would not be enough to cover Congdon & Associates for the large verdict that followed the trial. Court trials are unpredictable and potentially large verdicts are possible. Umbrella insurance gives an extra layer of protection beyond the limits of a primary auto insurance policy.
Certainly, auto insurance was needed to cover Congdon & Associates for injuries resulting from its employee’s negligent driving. But the expense of the trial and the verdict also required an extra layer of protection provided by umbrella insurance. It helped to cover costs that went beyond the limits of the company’s primary auto insurance policy. It was a good thing they had taken the time to review their coverages to make sure they were current and had policies that provided appropriate coverage.
The insurance coverages that would help the law firm here are auto liability and umbrella insurance. Failing to keep your coverages up to date with all the risks your business has could put your organization at risk.
Damage to the law firm’s property was not part of the claim incident in this scenario. Liability was related to the use of an auto, which is not covered under the general liability coverage of a BOP. So, a BOP would not help in this case.
Which insurance product or products can most help protect Congdon & Associates in this scenario?
Scenario #2 | Professional Services | Congdon & Associates
Scenario #2: Professional Services | Congdon & Associates
Business Owner’s Policy (BOP) and workers compensation insurance
Professional liability insurance
General liability insurance
After working so hard to build her salon, Stephanie was determined to protect her dream. On advice from her Travelers independent agent, she had maintained her workers compensation coverage and adjusted the property limits on her BOP – a proactive move that served her well when tragedy struck.
The correct answer is Business Owner’s Policy (BOP) and workers compensation insurance. Because Stephanie regularly updated her BOP to make sure it kept up with inflation, she was well covered and was able to help return her salon to tip-top shape even though replacement materials had become more expensive over time. Workers compensation insurance helped cover medical care expenses for her injured employee as well.
Professional liability insurance is specific, in Stephanie’s case, to salon services. They have no bearing on the example here. The correct answer is Business Owner’s Policy (BOP) and workers compensation insurance. Because Stephanie regularly updated her BOP to make sure it kept up with inflation, she was well covered and was able to help return her salon to tip-top shape even though replacement materials had become more expensive over time. Workers compensation insurance helped cover medical care expenses and lost wages for her injured employee as well.
Stephanie regularly updated her BOP to make sure it kept up with inflation. That meant she was well covered and was able to help return her salon to tip-top shape, even though replacement materials had become more expensive over time. Workers compensation insurance helped cover medical care expenses and lost wages for her injured employee as well.
Because there were no cars involved in Stephanie’s claim, auto insurance would not help her in this example. The correct answer is Business Owner’s Policy (BOP) and workers compensation insurance. Stephanie regularly updated her BOP to make sure it kept up with inflation. That meant she was well covered and was able to help return her salon to tip-top shape, even though replacement materials had become more expensive over time. Workers compensation helped cover medical care expenses and lost wages for her injured employee as well.
Because there is no third-party damage caused by Stephanie’s negligence to result in legal action against Stephanie, general liability insurance does not apply here. The correct answer is Business Owner’s Policy (BOP) and workers compensation insurance. Because Stephanie regularly updated her BOP to make sure it kept up with inflation, she was well covered and was able to help return her salon to tip-top shape even though replacement materials had become more expensive over time. Workers compensation insurance helped cover medical care expenses and lost wages for her injured employee as well.
Finish
Which insurance product or products can help protect Stephanie’s business in this scenario?
After working for salon owners for years, Stephanie finally saved enough money to open a salon of her own. She had a trusted team working with her and, for the first five years, business was good … and growing. But in her sixth year, a tragic incident rocked Stephanie’s business. A space heater overheated, resulting in a fire, causing major damage to her building and equipment. Even worse, one of her lead stylists suffered significant third-degree burns.
Scenario #3 | Beauty | Stephanie’s Salon
Because there were no cars involved in Stephanie’s claim, auto insurance would not help her in this example. The correct answer is Business Owner’s Policy (BOP) and workers compensation insurance. Stephanie regularly updated her BOP to make sure it kept up with inflation. That meant she was well covered and was able to help return her salon to tip-top shape, even though replacement materials had become more expensive over time. Workers comp helped cover medical care expenses and lost wages for her injured employee as well.
Scenario #3: Beauty | Stephanie’s Salon
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Disclaimer: These examples are for illustrative purposes only. The scenarios, names, characters and incidents portrayed here are fictitious. No identification with actual persons (living or deceased), places, buildings and products is intended or should be inferred.
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