Do You Need Specialty Insurance for Your Business?
Owning and operating a business requires all the usual insurance considerations. You must insure your vehicles, real estate, office, and production equipment, and take out liability coverage for customers on your business site. If you have high-value inventory, you may want to insure it separately or increase coverage for its value. Some businesses need other insurance for special operations or risks, called specialty insurancei.
Specialty insurance plans cover unusual needs of business. It could be necessary due to high-risk business property or holdings, or products such as firearms or high value artwork or antiques. It is not just products, but also business activities or the activities of their customers that can create the need for specialty insurance. Construction companies, especially those in urban areas, carry a greater risk of injury not only to workers but to passersby as well.
Other examples that involve the participants or customers would include skydiving businesses, car racetracks, and firing ranges. Businesses that have customers participating in activities that involve high risk should consider specialty insurance. In some cases, licensing or getting municipal approval for a business will require that insurance.
E&O, Errors and Omissions insurance is common for service providers to protect them from lawsuits by customers and others. Attorneys, real estate agents, and home inspectors are examples. They carry this insurance to cover the costs of defense that can begin with a complaint to their association and move on to the courts. E&O is often required for a license to conduct business. Healthcare providers carry malpractice and other specialty insurance, as they are often the target of lawsuits when medical treatment does not produce the desired or expected result. E&O, as the name implies, only covers errors or omissions in the provision of services, not any intentional fraud or acts.
There are also what is called substandard risk insuranceii. An example would be crime insurance for higher risk businesses such as bars, convenience stores, liquor stores, and gas stations. While they can get some coverage in standard policies, it usually is not sufficient or extremely high cost. Substandard insurance provided by some specialty insurance companies can provide specialized crime coverage, especially if your business follows their requirements to take certain precautions against burglary or robbery.
There are companies that specialize in specialty insurance. It is often not an off-the-shelf product. Each business and situation is different, including the risks of the business. These companies analyze the business, customers, products, and services to tailor insurance policies to mitigate risk.
The first step in determining if you need specialty insurance for your business is to look at every activity of your business, customers, and the business location. Also, are there things that keep you awake at night, such as worry about theft or crime? If so, you may want to consider sleeping better with some specialty insurance coverage. It may not be as expensive as you think, as it is narrow and focused coverage.