5 Types of Business Insurance Coverage (You’ve Probably Never Considered)

If you’re a regular reader of this blog, you might’ve noticed that lately we’ve been meting out advice in parcels of five. (See for example: 5 Tips for Writing an Effective Employee Handbook, 5 Ways the NLRB Regulates Employer-Employee Relationships, 5 Considerations for Protecting Your Trademark, etc.)

Really, there are only two possible paths forward. Either we quit with this fives fetish, or go all in for the remainder of the week. We’re still deciding. In the meantime, for your interest:

5 Types of Insurance Coverage (You’ve Probably Never Considered)

…but should:

1. Vendor Insurance

Or, more specifically: the correct type of insurance coverage of your vendor that also covers any possible damages to your business. From Pierce Atwood: “Unfortunately if your purchasing contracts contain the standard insurance boilerplate that merely requires the vendor to maintain Commercial General Liability insurance (CGL), there will probably be no insurance coverage to pay for any of these claims. [For example] the standard CGL policy expressly excludes coverage for electronic data, including information and programs stored on a computer…” (Do Your Vendors Have the Right Insurance to Pay for the Damages They May Cause to Your Business? – Pierce Atwood LLP)

2. Intellectual Property Insurance

Before you think that’s, ahem, patently ridiculous, read this: “…While I have been involved in cases where courts have interpreted general liability insurance policies to cover copyright, trademark and trade dress infringement, trade secret violations and, in certain situations, even patent infringement, insurance companies are more routinely excluding this coverage.  Moreover, some insurers have changed the language of their standard general liability policies in an attempt to exclude any IP coverage.” (IP Liability Insurance: Do You Have the Protection You Think You Have? – Downs Rachlin Martin PLLC)

3. Cyber Insurance

“As everyone knows from the headline news, it is getting harder every day for companies to protect their data and networks from theft and data hacking, and in the current regulatory environment the stakes for even inadvertent disclosure of private data are high. Customer names, credit card information, social security numbers, passwords, employee information, and confidential commercial information and intellectual property are all at risk in a data breach. Loss or unauthorized disclosure of this data can mean lost revenue and public trust, not to mention the costs of remediating the breach or fending off lawsuits by the affected parties… As companies become more reliant on sophisticated networks and data flow, and have to rely more and more on third-party vendors to handle their sensitive information, the importance of cyber insurance only grows.” (Negotiating the New World of Cyber Insurance – Pillsbury Winthrop.)

4. Life Insurance (for Your Key Employees)

“Do you have a partner or other key employee who along with yourself is indispensible to the viability of your business? While disability insurance can replace that income, key man life insurance can provide protection to the business should the ‘key’ person; you included, become disabled or pass away. Recognize that the death of a key person can have a devastating effect on the operations of a business for an extended period of time…” (What Insurance Does My Business Really Need? Ten Key Areas to Consider when Purchasing Business Insurance – Jaburg Wilk)

5. Business Interruption Insurance

Which is exactly what it sounds like, and you may have some coverage already, but requires planning: “Having the correct insurance in place is only the first step. Property and business interruption insurance policies are often complex, and your suppliers, customers and other business partners’ insurance situation may have a direct effect on you as well. Even if your business doesn’t suffer any direct physical damage to its facilities following a natural disaster or other loss, your customers or suppliers may have, and that could result in what is known as a ‘supply chain’ or ‘contingent business interruption’ loss of revenue and sales. If you’re unprepared when a disaster strikes, you may miss out on substantial amounts of insurance coverage to which you may be entitled.” (Is Your Company Prepared For A Disaster? The Property And Business Interruption Insurance Checklist – Lowenstein Sandler PC)

*Bonus: Wage & Hour Insurance

Just in from law firm Gilbert LLP: “Although the best strategy to avoid a devastating wage and hour class action is to carefully review your employment practices with a qualified attorney, an often overlooked component of a company’s protection from the financial consequences of such a claim is its insurance policies. To ensure the best protection, any employer should consider carefully, with the help of a professional if necessary, the specifics of its insurance policies and how they are likely to respond in the event of such claims…” Enough said. (Rethinking Common Wisdom Of ‘Wage And Hour’ Insurance – Gilbert LLP)

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