Some types of businesses don't typically fit the mold of standard insurance policies because of their elevated risk levels. So, writing a business insurance policy for them can be a real challenge. We've created this guide to show you what high-risk businesses are and why insurers typically consider them to be risky.
What is a High-Risk Business?
A high-risk business is one that is perceived to have a higher risk of failure or financial loss. This category includes any business that faces a high risk of employee injuries, bodily harm on the job, or property damage as a result of unsafe practices.
A business is also considered high-risk if it has more claims and more lawsuits against it. It requires significant liability coverage, typically exceeding what standard insurance coverage or policies would offer a business. Aside from the above classifications, companies that operate in high-risk places may also fall under this group.
If you operate a high-risk business, your insurer might charge you higher premiums to provide sufficient coverage for you to run your business. High-risk business insurance coverage might include lawsuits and penalty fees for non-compliance with local, federal, and state requirements.
Common Risks Associated with High-Risk Businesses
Your company faces an infinite number of risks. For the best chance of success, you need a plan for every possible scenario, from legal battles to company closures. The following are five common business risks and ways to mitigate their impact.
Damage to the business or its stock
Can you afford to make extensive repairs or rebuild your business if your business property (premises and inventory) is damaged or destroyed by a fire or natural disaster? Consider purchasing business owner's insurance to protect your company and cover business repairs. Furthermore, property coverage covers any damaged or lost belongings during a covered event. Take the time to create a complete inventory of your company's items (furniture, office supplies, and appliances).
Business Interruption
Some business owners fail to consider what they would do if a severe weather event, such as a hurricane or a fire disaster, rendered their premises unusable. It's critical to have a solid plan in place in case you need to relocate or close down for repairs. Business interruption insurance would be useful in this situation. A typical insurance policy provides coverage for fire, lightning, wind, theft, and falling objects. It can assist you in recouping lost income and paying additional expenses, such as rent, in your new location.
Physical Injuries at Your Business
In your business, a customer, employee, or visitor could be injured. If you are found liable due to negligence, your company may face hefty fines as well as paying for medical expenses and legal fees. Apply for commercial general liability insurance to protect your company. It is frequently included in business owners' insurance policies and can protect your company if someone is injured on your property. If an employee is injured while performing routine work, you can avoid liability if you have workers' compensation insurance. You will not be prosecuted for unfair labor practices.
Professional Liability
Does your company provide professional services or consulting to a variety of clients? Due to alleged negligence or misadvising clients, your company will almost certainly face lawsuits. Consider professional liability insurance, also known as errors and omissions insurance, in this situation. An active policy will protect you from clients who intend to sue your company for any losses incurred as a result of the advice or services you provide. It can also cover legal fees and other costs incurred as a result of court judgments and settlements against your company.
Data Breaches
Cybercriminals pose serious threats to businesses in a digitally interconnected world. The risk of having their data is one. Invest in cutting-edge technology and robust networking solutions. Use a firewall to protect your network and encrypt data that passes through it. Employee education on internet security and data protection is also essential.
Consider adding data compromise coverage, also known as data breach liability insurance, to your current business insurance policy. It will protect your company from the potential consequences of a breach and, among other things, pay for legal fees.
Contact Us for Business Insurance Coverage
Running a high-risk business can be intimidating, but with the right high-risk insurance coverage, you can reduce the risks and consequences that could result in financial loss. In Dallas, TX, The Thumann Agency, Inc. provides services to high-risk businesses. Call 972-991-9100 to speak with one of our insurance experts or request a quote online today.