{"id":15046,"date":"2023-07-14T09:00:00","date_gmt":"2023-07-14T13:00:00","guid":{"rendered":"https:\/\/gesselins.com\/?p=15046"},"modified":"2025-02-11T10:30:24","modified_gmt":"2025-02-11T16:30:24","slug":"the-risks-of-not-having-commercial-insurance","status":"publish","type":"post","link":"https:\/\/www.gesselins.com\/blog\/the-risks-of-not-having-commercial-insurance\/","title":{"rendered":"The Risks of Not Having Commercial Insurance"},"content":{"rendered":"<p><span style=\"font-weight: 400\">The need for a business to file a commercial insurance claim always happens to the other guy. You\u2019ve got your ducks in a row, so you won\u2019t encounter any problems\u2014until you do.<\/span><\/p>\n<p><span style=\"font-weight: 400\">When The Hartford conducted a survey of\u00a0<\/span><a href=\"https:\/\/www.thebalancesmb.com\/most-common-insurance-claims-462673\"><span style=\"font-weight: 400\">business owner insurance claims<\/span><\/a><span style=\"font-weight: 400\">\u00a0over a five-year period, they found claims on more than one million liability and property policies. They predict that 40% of small businesses will experience a liability or property loss within the next ten years.<\/span><\/p>\n<p><span style=\"font-weight: 400\">If you have insufficient insurance coverage, you risk suffering economic losses your business may not recover from. According to the\u00a0<\/span><a href=\"https:\/\/www.insurancejournal.com\/magazines\/mag-features\/2012\/04\/16\/243594.htm\"><span style=\"font-weight: 400\">Insurance Journal<\/span><\/a><span style=\"font-weight: 400\">, 75% of U.S. businesses are underinsured by at least 40%. Labor and material shortages brought on by the pandemic have further widened this gap.<\/span><\/p>\n<p><span style=\"font-weight: 400\">More than 15 million Americans reside in counties averaging one or more weather-related disasters\u00a0per year since 2006. Following a weather-related disaster, 40% of businesses never reopen.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Bad weather is just one of the things that can destroy your business if you have insufficient coverage. Keep reading to learn more.\u00a0<\/span><\/p>\n<p><strong>Frequent Claims Against Commercial Insurance Policies<\/strong><\/p>\n<p><span style=\"font-weight: 400\">During the five-year study noted above, a determination was made regarding claims happening with the highest level of frequency. Those are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">20% Burglary and Theft\u2014third parties, dishonest employees, or company principles<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">15% Water and Freezing Damage\u2014often due to snow and ice on the roof or low inside temperatures causing pipes to freeze<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">10% Fire\u2014failure to test the fire detection and suppression equipment regularly<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">5% or less Consumer Injury and Damage\u2014injuries clients sustain on the property<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">5% or less Product Liability\u2014for claims against products the company manufactures<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">5% or less Struck by Object\u2014items such as grocery carts, vehicles, or falling objects<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">5% or less Reputational Harm\u2014lawsuits for libel and\/or slander<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">5% or less Vehicular Accident\u2014accidents using a business vehicle<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">A determination of the need for insurance can not be based solely on the frequency of claims. You must also consider the average dollar amount of each claim. For instance, even though reputational harm claims are under 5%, the average claim is $50,000.<\/span><\/p>\n<p><a href=\"https:\/\/gesselins.com\/blog\/your-guide-to-understanding-business-insurance\/\"><span style=\"font-weight: 400\">Understanding business insurance<\/span><\/a><span style=\"font-weight: 400\">\u00a0and the specific needs of your company is what your commercial insurance agent helps with.<\/span><\/p>\n<p><strong>Risks of Having Insufficient Commercial Insurance<\/strong><\/p>\n<p><span style=\"font-weight: 400\">One risk your business\u00a0might suffer is having insurance, but not enough to cover the necessary payout following a claim and\/or lawsuit. Consider your company\u2019s financial holdings and whether it can handle the following:<\/span><\/p>\n<p><strong>Financial Impact<\/strong><\/p>\n<p><span style=\"font-weight: 400\">If your business suffers damage from flooding, fire, hurricane, tornado, or any other natural disaster, can you handle the cost of repairs or replacement? Consider all possible losses, including the building, equipment, furniture, decorative items, and more.<\/span><\/p>\n<p><span style=\"font-weight: 400\">In addition to the cost of restoring your property, you need to cover your employee\u2019s wages, building rent or mortgage payments, and more while the business is closed.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Beyond natural disasters, things such as vandalism, cyber-attacks, fraud, and embezzlement financially impact the business. These acts may be from third parties, an employee, or a chief officer. The insurance necessary to cover an employee who embezzles funds vs an outside party stealing is different.<\/span><\/p>\n<p><span style=\"font-weight: 400\">For any of these losses, an underinsured business may need to pay funds beyond what its insurance covers. This can put the business into bankruptcy, and may even force the owner to file personal bankruptcy.<\/span><\/p>\n<p><strong>Legal Action<\/strong><\/p>\n<p><span style=\"font-weight: 400\">If a client believes you have not fulfilled your portion of a contract, they have injuries because of a defective product, are in an accident with a commercial vehicle, or suffer personal injuries on your property, they may file a lawsuit against the business.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You may also have a disgruntled employee file action against you or an employee. This may be for sexual harassment, discrimination, failure to comply with ADA, or non-compliance with workers\u2019 compensation regulations.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Litigation is costly and can last for years. According to a survey conducted by the Small Business Association (SBA), the\u00a0<\/span><a href=\"https:\/\/www.sba.gov\/sites\/default\/files\/files\/rs265tot.pdf\"><span style=\"font-weight: 400\">cost of litigation<\/span><\/a><span style=\"font-weight: 400\">\u00a0ranges from $3,000 to $150,000.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Most companies use business assets to pay the damages. Many owners state paying damages has almost put them out of business. \u00a0<\/span><\/p>\n<p><strong>Non-Compliance<\/strong><\/p>\n<p><span style=\"font-weight: 400\">This can happen if you fail to follow a local, state, or federal law. This can be anything from licensing, signage, or mandatory insurance coverage.<\/span><\/p>\n<p><span style=\"font-weight: 400\">If your business is found to lack proper insurance coverage you may suffer fines, penalties, and revocation of any licensing.<\/span><\/p>\n<p><span style=\"font-weight: 400\">One type of mandatory insurance is workers\u2019 compensation. This policy lowers the risk of an employee who suffers injuries from suing the company.<\/span><\/p>\n<p><strong>Reputation Damage<\/strong><\/p>\n<p><span style=\"font-weight: 400\">As a small business, you are vulnerable to word-of-mouth complaints or cyberattacks undermining your company&#8217;s reputation. With the correct type of insurance coverage, you will have the funds necessary to assist with this type of damage.<\/span><\/p>\n<p><strong>Economic Disasters<\/strong><\/p>\n<p><span style=\"font-weight: 400\">Everyone knows about The Great Depression which ran from 1929 to 1938 and was the largest economic crisis in the United States. In addition to that, there have been\u00a0<\/span><a href=\"https:\/\/www.thebalance.com\/the-history-of-recessions-in-the-united-states-3306011\"><span style=\"font-weight: 400\">19 recessions<\/span><\/a><span style=\"font-weight: 400\">\u00a0in the U.S. The first is one due to the failure of the Reading Railroad in 1893.<\/span><\/p>\n<p><span style=\"font-weight: 400\">A few other notable ones include the recession between 1973 and 1975, which quadrupled oil prices because of the OPEC oil embargo. Between 1980 to 1982 there were two recessions because the federal government raised interest rates to combat inflation.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Move up to the 21st century, where we have three recessions already under our belt. The first was in 2001 which began with a boom and burst in the dot-com businesses. The 9\/11 attack made the recession worse. \u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">The Great Recession took place from 2008 to 2009 and was the longest economic contraction since The Great Depression. Unemployment rose to 10% and a mortgage crisis triggered a bank credit crisis.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The 2020 recession is the worst economic disaster in the country since the Great Depression. The economy lost 20.5 million jobs, unemployment went to 14.7%, and the pandemic caused a stock market crash. Businesses are still trying to recover.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">As a business, you cannot plan for economic disasters. What you can do is speak with your\u00a0<\/span><a href=\"https:\/\/gesselins.com\/business-insurance\/\"><span style=\"font-weight: 400\">business insurance company<\/span><\/a><span style=\"font-weight: 400\">\u00a0about the best way to provide coverage for you and your business during recessions.<\/span><\/p>\n<p><strong>Is Your Business Underinsured?<\/strong><\/p>\n<p><span style=\"font-weight: 400\">Small businesses usually claim the cost of insurance, being unsure of what coverage they need, or believing they don\u2019t need insurance as a reason for lacking coverage. Purchasing a minimum amount of insurance is one of the ways businesses try to save money. This may cost them the entire business if a problem arises.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Gessel &amp; Associates Insurance Agency specializes in commercial insurance. Check out our\u00a0<\/span><a href=\"https:\/\/gesselins.com\/clickable-coverage\/\"><span style=\"font-weight: 400\">clickable coverage page<\/span><\/a><span style=\"font-weight: 400\">. Click the image that represents your industry. On the next page, tap the dots you see on a business photo to learn about areas of risk your company faces.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Your next step is to\u00a0<\/span><a href=\"https:\/\/gesselins.com\/contact\/\"><span style=\"font-weight: 400\">contact Gessel &amp; Associates<\/span><\/a><span style=\"font-weight: 400\">\u00a0Insurance Agency at 740-852-7725 to request a consultation today.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The need for a business to file a commercial insurance claim always happens to the other guy. You\u2019ve got your ducks in a row, so you won\u2019t encounter any problems\u2014until you do. When The Hartford conducted a survey of\u00a0business owner insurance claims\u00a0over a five-year period, they found claims on more than one million liability and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":15079,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-15046","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-insurance"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/posts\/15046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/comments?post=15046"}],"version-history":[{"count":1,"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/posts\/15046\/revisions"}],"predecessor-version":[{"id":15080,"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/posts\/15046\/revisions\/15080"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/media\/15079"}],"wp:attachment":[{"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/media?parent=15046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/categories?post=15046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gesselins.com\/blog\/wp-json\/wp\/v2\/tags?post=15046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}