Insurance and Protection

What types of insurance should you consider?

Insurance coverage is available for every conceivable risk your business might face. Talk to your insurance agent about different insurance options. Cost and amount of coverage of policies vary among insurers. You should discuss your specific business risks and the types of insurance available with your insurance agent or broker.

• Your insurance agency can advise you on the exact types of insurance you should consider purchasing.
• Basic overview of business insurance from the SBA and the Insurance Information Institute.

Assess your insurance coverage on an annual basis.

• Insurance policies vary – check with your agent or provider about things such as physical losses, flood coverage and business interruption.
• Understand what your policy covers and what it does not. Ask about any deductibles, if applicable.
• Consider how insurance can help you pay creditors and employees following damage or business interruption. You should also plan how you will provide for your own income.
• Find out what records your insurance provider will want to see after an emergency and store them in a safe place.
• Use this Insurance Discussion Form from Ready.gov to discuss your insurance coverage with your agent.

Maintain up-to-date insurance information by keeping a list of all insurance policies and contact information for your insurance broker or insurance company. Make backup copies of your insurance policies and keep them in a safe and accessible place.

Dealing with Your Insurance After a Disaster or Extreme Event

Your insurance policy is a contract between you and your insurance carrier. As the insured, you have certain duties and responsibilities in the event of a loss. When dealing with your insurance carrier in the event that your business suffers damages and/or losses:

• Notify you broker or insurance company that a loss has occurred, first by telephone and then follow-up in writing.
• Make emergency and temporary repairs to mitigate further damage.
• Prevent liability by blocking building entry of unauthorized individuals.
• Review the insurance policy to verify the scope of the amount of coverage.
• Establish a “disaster loss amount” to track all loss-related expenses.
• Document your activity in a log and maintain accurate records.
• Collect all books, records, and other data (photographs, etc.) pertaining to the damaged property.
• Contact the insurance company’s representatives to arrange for a joint inspection of damages. When you first meet with the insurance representative try to reach an agreement of the scope of the damage and loss and on a rough timetable of events to drive the adjustment process.
• Document, in writing, all agreements with the insurance adjuster.
• Request and advance payment on the loss from the insurance company, first verbally and then follow-up in writing.
• Evaluate the building, contents and business interruption/ extra expense claims.
• Quantify the building damage by preparing a diagram of the building, indicating all damaged areas.
• Prepare a detailed estimate of the damage to business personal property pricing according to recent invoices, catalogs or knowledge of the products. To speed up the process, invite the adjuster to work with you to develop the damage estimates. It may eliminate controversy in the final stages of the adjustment.
• For the business interruption and extra expense claims, gather information from books, records, forecasts and market analysis, and then determine the period of indemnity.

Physically protect your small business

Your business may house inventory and supplies, expensive technology, irreplaceable documents, and sometimes large amounts of cash. Keep them safe with these simple security measures.

• Purchase a fireproof safe to hold cash and important documents. Make sure that only a few people know the combination (or have access to the key). Change the combination on a regular basis.
• Invest in security cameras, monitoring, and alarms.
• Consider wireless security systems (such as Frontpoint, ADT, SimpliSafe). These can be inexpensive, easy to install, and versatile because you can select only the components (receiver, motion sensors, cameras, door alarms, smart locks, etc.) you need for your space. Most wireless security systems also sync with your smartphone, so you can receive real-time alerts no matter where you are. Security systems add an additional line of defense against burglary, vandalism and unwanted intruders and allow you to keep an eye on your facility when you’re not there.
• Security cameras allow you to capture the proof you need to prosecute if anything goes missing or is damaged in your office, or if an employee has been a victim of harassment. Simply having cameras hung around the office may deter burglars; so if you only have a limited budget for office security consider installing a fake camera in a conspicuous location to scare potential intruders away.
• Invest in a fire alarm and sprinkler system
• A fire alarm can signal when a fire occurs giving everyone in the facility time to get out.
• A fire alarm can be integrated into some security systems.
• To protect your physical assets, consider investing in a sprinkler system to douse the fire preemptively.

Cybersecurity

Information technology and high-speed Internet are great enablers of small business success, but with the benefits comes the need to guard against growing cyber threats. Theft of digital information has become the most commonly reported fraud, surpassing physical theft. As larger companies take steps to secure their systems, less secure small businesses are easier targets for cyber criminals. 43% of cybersecurity attacks are aimed at small businesses, and the number is expected to increase.

To prevent the possibility of a data breach and keep your digital assets safe, here are a few simple strategies and actions (For more, see these 10 cybersecurity security tips from the FCC)

• Invest in cybersecurity tools such as password managers, antivirus software, malware software, and attack monitoring tools.
• Choose strong, unique passwords. Make sure your passwords are strong, with a long string of characters, including lowercase letters, uppercase letters, numbers, and special symbols. Never use the same password more than once; every account should have a different password.
• Secure your networks with a strong password. Consider using a virtual private network (VPN) to encrypt and secure all your remote connections.
• Keep software up-to-date utilizing automatic updates whenever you can.
• Use multifactor authentication. When you enable multifactor authentication, you need additional information other than your username and password to log in. This could be a code you receive via text message or an image you specify that must be identified each time you log in.
• Train your employees so they are familiar with cybersecurity best practices and take them seriously. One of the most important steps you can take for your organization’s cybersecurity is training your employees and keeping them up-to-date on the latest best practices. Consider these free resources and training developed by the Michigan SBDC as a starting point.

Additional resources:

• The Small Business Guide to Cybersecurity will help you understand the cybersecurity risks facing small businesses, the most common cyberthreats, how to secure your business, and how to respond to a data breach.
• This web-based Cybersecurity Toolkit for Small Business is designed to be completed in six steps. Also offers an online learning portal for training courses and resources.
• Resources from the SBA to stay safe from cybersecurity threats.
• This Cyber Essentials Starter Kit is a 17-page guide for small business leaders to start implementing organizational cybersecurity practices.