Identify which policy addresses each risk
- General liability: addresses covered third-party bodily injury, property damage, and personal or advertising injury claims.
- Business owner policy (BOP): may combine general liability, property, and business interruption coverage for eligible businesses. Check the causes of loss and limits.
- Professional liability / E&O: addresses covered claims involving professional errors or negligence. Review the services insured and any retroactive date or reporting requirements.
- Workers' compensation: addresses eligible work-related injuries and illnesses. Requirements and exemptions vary by state and workforce, including employees working across state lines.
- Employment practices liability: may address covered allegations such as discrimination, harassment, or wrongful termination.
Look beyond contractual minimums
A lease, lender, or client contract may specify liability limits without addressing all of the business's risks. Review the requirements with the policies and endorsements, including any additional-insured or other contractual conditions. A certificate of insurance is not a substitute for the contract.
For a business that relies on data or software, examine cyber coverage for incident response, legal support, data restoration, liability, and interruption. Covered events, waiting periods, exclusions, and sublimits differ. A policy with a cyber label may not cover every interruption or fraudulent transfer.
Separate key-person loss from ownership funding
Key-person life or disability coverage may give the business resources to replace a critical worker, service debt, or stabilize operations after a covered event. Confirm who owns the policy, who receives benefits, and how the benefit relates to the expected loss.
A buy-sell agreement serves a different purpose: defining an ownership transfer after specified events. Review its valuation, triggers, payment terms, and funding with the business's legal and tax professionals. A life policy will not fund every trigger in an agreement that also addresses disability or retirement.
For an owner-dependent practice, business overhead expense coverage may reimburse eligible expenses during a qualifying disability. Compare it with the owner's personal disability coverage; the two address different bills.
Review when the business changes
- New employees, work locations, services, or contracts
- Changes in revenue, payroll, property values, or equipment
- New owners, a revised valuation, or an amended buy-sell agreement
- Changes in technology, stored data, or outsourced operations
Bring current policies, relevant contracts, and ownership agreements to the review. Caleb can coordinate the insurance questions with the advisor and other professionals responsible for the plan.
