Safeguarding your small business from loss and liability

While small businesses typically have fewer employees and smaller operations compared to large enterprises, they still have similar exposures—from fire and water damage to theft, cyber breaches and third-party liability. But small businesses may not be aware of the impact of these exposures, and may not have adequate prevention and protections in place.

Small businesses also have a number of other considerations—and protections they should consider—that will be unique to their size and industry. For example, home-based businesses are likely not covered by your home insurance policy unless specific coverage has been added. Unless properly insured, using a personal vehicle for a small business could impact or negate your insurance if you have to make a claim.

Below are important areas to consider in loss prevention, whether you’re a contractor, retailer, professional services provider or other small business.

4 common small business risks

1. Don’t trip up on third-party liability

For any size or type of small business, a major concern is third-party liability claims, where a customer could sue you or your business for an injury (such as a slip, trip and fall involving negligence) or property damage.

Accidents happen, but preventive methods and due diligence can reduce many of these risks. Keep offices and job sites clean, dry and clear of hazards, with good lighting and signage to warn of any danger. Make sure staff are certified and trained appropriately for the type of work you do. Vehicles, tools and equipment should also be well-maintained and inspected regularly.

If you’ve done all you can but an accident still occurs, commercial general liability insurance can provide coverage for claims of bodily injury and property damage.

2. Keep an eye on Mother Nature

Major weather events and natural disasters—such as wildfires, windstorms and floods—are a significant concern, particularly with the increasing frequency and severity of these events. Businesses need to be aware of not only what damage or loss can occur during the event itself, such as to buildings or equipment, but also how these events can interrupt ongoing operations.

While it’s not possible to prevent a storm, it’s possible to prepare. Proactively creating emergency response plans that consider power outages, Internet outages and relocation options is a good start. Weather alerts sent to your phone can help you prepare, whether that means moving vehicles and equipment indoors or charging devices and battery back-ups.

Business interruption insurance can help business owners get back on their feet if they suffer a major loss during a severe weather event.

3. Don’t take the bait on cyberattacks and security risks

Digital security is also a growing concern, regardless of the size of your business—but small businesses are increasingly becoming the target of cyber attackers. Small businesses may have access to stored data, such as customer credit card information, financial data or other sensitive documents, but may not have adequate policies, procedures and protections in place. Cyber attackers see these under-protected businesses as an easy mark.

For those reasons, anti-malware protection is a must-have for any business. Likewise, employee training can also help to mitigate phishing and social engineering attacks. And if you’re operating an e-commerce business or storing financial information, ensure you’re using a reputable third-party service to protect this data.

Additionally, although it can be tempting to stick to what you know, use strong passwords that you change regularly.

4. Trust your instincts … and credible sources

By only working with reputable vendors, you can prevent potential theft of your own assets and your customers’ information. If you’re not sure a vendor is legitimate, look for online reviews and BBB reports. Ask your local business community or Chamber of Commerce what they would recommend. And stick to the old adage: if it seems too good to be true, it probably is.

Retailers: Don’t sell these risks short

Fire

Fire is a cause of major losses in the workplace, and there are plenty of potential hazards lurking in retail environments—from loose wiring and overloaded power sockets to the use of flammable liquids. Limit extension cord use, ensure combustibles aren’t stored near electrical panels and discontinue the use of portable heaters. Also ensure proper storage or removal of flammable liquids from the building.

Inventory damage

As a retailer, you need to protect your inventory. A fire, flood or major storm could cause property damage to your storefront or warehouse, but it could also damage inventory and supplies. Along with those losses, the interruption to your business could be hard to recover from, especially if you have salaries to pay while your business is closed for repairs or you await more inventory. If you have stock stored in a basement level, or area where water can pool, consider elevating boxes and items on shelving or pallets to reduce water damage potential.

Let’s get digital

If you have a website, social media presence or e-commerce capabilities, you are a target for digital theft and cybercrime. While we’re more likely to imagine hackers stealing databases of credit card numbers, small businesses also have to be aware of smaller scams. So-called “customers” may place large orders, only to initiate a chargeback when the order has shipped, leaving the small business to fight the big banks for their money. Potential vendors found online may take deposits, and never provide the merchandise or service.

Professional services: Consult these concerns

Professional services coverage

If you run a service-based business—such as an accounting office, an advertising agency, a real estate operation or a legal service—one of your biggest risks comes in the form of professional liability. Mistakes can damage your reputation and result in costly legal fees.

Due diligence includes maintaining professional certifications and training, using reputable software and allowing reasonable time to complete work thoroughly.

Downtime and data protection

Data loss and technical difficulties can significantly impact your ability to get the job done. If you lose valuable client files—whether via a natural disaster, ransomware attack or computer fraud—you could lose your entire business.

Having a backup of your data is critical. Stick to well-known industry software for sensitive data storage, and practice cybersecurity best practices.

Protecting your small business

Small business owners are often operating with little sleep and no time to spare. But protecting against risk should always be a priority, or you could lose everything you’ve worked so hard to build. Taking time to recognize potential risks and implementing preventive measures can go a long way to help protect your business.

Wawanesa offers a range of small business insurance packages that provide coverage for building and business contents, loss of income, liability, crime, equipment breakdown, legal expenses and even cyber risks.

Contact your Wawanesa insurance broker to discuss the coverage needs for your small business.