Fall is a good time for business owners to review more than property maintenance and year-end plans. Some of the most expensive losses a business can face don’t involve a fire, storm, or stolen equipment. They can begin with one email, one unhappy employee, or one professional mistake.
Here are four exposures every small business should have on its radar this fall.
Cyber Threats & Data Breaches
A common misconception is that cybercriminals only target large corporations. Small and local businesses can be attractive targets precisely because they may have fewer cybersecurity resources while still having valuable information and access to money.
Consider a few everyday scenarios:
- An employee clicks what appears to be a Microsoft 365 password-reset email. It’s fake, and a criminal gains access to the employee’s mailbox.
- A business owner receives an email that appears to be from a longtime vendor announcing new banking instructions. The next $18,000 payment goes to a criminal’s account.
- Ransomware locks a company out of its computers and customer records for several days.
- An employee accidentally emails a spreadsheet containing customer information to the wrong person.
A cyber policy can potentially provide coverage for expenses such as forensic investigation, data restoration, customer notification, legal assistance, business interruption and ransomware response, depending on the policy.
Why does cyber insurance matter for a small local business? Because the size of the business doesn’t necessarily determine the size of the problem. A five-person company can still have thousands of customer records, rely heavily on email and cloud systems, accept electronic payments, and be unable to operate if its technology is unavailable.
Cyber insurance is also different from simply having good cybersecurity. Strong passwords, multifactor authentication, employee training and backups help prevent losses. Cyber insurance helps a business respond financially and operationally when prevention fails.
Employee-Related Claims
As businesses hire, terminate, promote, discipline and manage employees, another exposure develops: employment practices liability.
Claims can involve allegations of discrimination, harassment, retaliation or wrongful termination. Even when an employer believes it handled a situation appropriately, defending an allegation can still require legal assistance and significant expense.
For example, imagine a small business terminates an employee after documenting repeated performance problems. The former employee later alleges that the termination was actually related to age, disability or another protected characteristic.
Employment Practices Liability Insurance (EPLI) may help with defense costs, settlements or judgments arising from covered employment-related allegations.
Good documentation and consistent HR practices remain extremely important—but insurance can provide another layer of protection when a dispute becomes a claim.
Professional Liability: When Your Advice or Work Is the Problem
General liability insurance is important, but it isn’t designed to cover every type of business mistake.
Businesses that provide advice, recommendations, designs, professional services or specialized expertise may have a professional liability, or Errors & Omissions (E&O), exposure.
For example:
- A consultant recommends a course of action that a client claims resulted in a significant financial loss.
- A bookkeeper makes an error that allegedly costs a client money.
- A technology company installs or configures a system incorrectly and the customer claims the mistake disrupted operations.
In situations like these, there may not be damaged property or a bodily injury—the customer’s loss may be primarily financial. That’s where professional liability coverage can become important.
The Risk That’s Easy to Miss: Coverage Gaps
One of the biggest mistakes a small business can make is assuming, “I have business insurance, so I’m covered.”
A standard business policy may provide excellent protection for buildings, contents, general liability and other traditional exposures. But cyber liability, employment practices liability and professional liability often require separate coverage or specific endorsements.
Fall is a great time for a business insurance checkup. Ask yourself:
- If we were hacked tomorrow, would we know what to do?
- If an employee brought a claim against us, where would coverage come from?
- Could a mistake in our work or advice cause a customer financial harm?
- Have we added employees, locations, equipment, services or technology this year that our insurance agent doesn’t know about?
Small businesses don’t need to be afraid of every possible risk. They do need to understand which risks they’re retaining—and which ones they want insurance to help absorb.