The advice to “hope for the best but prepare for the worst” is particularly important to business owners, including those who provide professional cleaning services. You want to be optimistic and enjoy running your company. But you also must be realistic about the risks you face and maintain adequate financial protection in the form of business insurance.
Owners and decision-makers who focus only on the first half of that axiom may think, “It’s pretty unlikely we’ll be hit by a lawsuit, suffer property damage, or anything like that.” However, they often come to regret their lack of preparedness. Even a seemingly minor incident can lead to a major financial burden for a company that does not have insurance to cover it.
“If a business is around long enough, the data suggests there is a good chance they could be hit with a lawsuit, property damage, theft, or another issue at some point,” says Peter Shelley, an actuary and president of biBERK. “Fortunately, organizations can take steps to reduce the risk of large expenses, such as understanding what types of claims are most common, working to avoid them, and having insurance to cover the costs if they can’t be avoided.”
Be proactive about risk reduction
The bad news is that the list of risks companies face is long. Below are five common types of incidents small businesses experience.
While it is essential to be “ready for anything,” being proactive about addressing these issues goes a long way toward minimizing your claims and letting you stay focused on your business. Plus, having fewer claims typically means enjoying lower insurance rates.
The list of risks companies face is long. Below are five common types of incidents small businesses experience.
- Nonemployee slip-and-fall accidents. All it takes is a bit of water on linoleum or oil on a concrete floor, and a customer, client, delivery person, or another third party can find themself on the ground in the blink of an eye. And this type of fall frequently produces injuries—from broken bones and concussions to damaged tendons and ligaments in wrists, knees, etc. Lawsuits resulting from slip-and-fall accidents can seek compensation for medical costs but also things like “pain and suffering” and lost wages during recovery.
What you can do: Be vigilant about and promptly address conditions that can lead to falls. That includes things like wet floors, snowy or icy sidewalks, damaged carpet, tile, or floorboards, and other slipping or tripping hazards. You can hire contract workers for some of these tasks, such as de-icing parking lots and sidewalks. You should also have adequate general liability insurance, as it can cover bodily injuries to nonemployees.
- Burglary and theft. Break-ins and theft result in significant losses in businesses of all kinds. Whether it is one major burglary or the repeated stealing of small amounts of company property, it all adds up.
What you can do: To minimize the risk of burglary, ensure you have a high-quality security system, including effective door and window locks and other deterrents like video surveillance and fencing around your building, if appropriate. You should also have business insurance for theft, like a business owners policy (BOP).
- Water damage. Issues caused by rain, snow, or leaking or burst pipes can be very costly to address.
What you can do: Ensure that you maintain an indoor temperature of at least 55 degrees Fahrenheit in the winter. Remove ice and snow buildup from your roof promptly. Make sure that multiple people know how to turn off the water supply in case of a burst pipe. Here again, it is vital to have a BOP. Its property coverage can pay for many types of water-related damage. Keep in mind that damage from flood waters is different from the issues described above. You’ll need a separate policy for that.
- Professional advice/services lawsuits. If you provide professional advice or services and a client feels you haven’t met the standards for your industry and your mistake caused them financial harm, they can sue you.
What you can do: Use well-defined statements of work or contract and have clients sign them. Also, establish strong relationships with your clients and maintain open lines of communication. That way, they are more inclined to contact you if they have an issue with your advice or service rather than immediately filing a lawsuit. Of course, you should also strive to do excellent work that exceeds industry standards. You can protect your business from the cost of lawsuits by having adequate professional liability insurance. Also called errors & omissions (or E&O) insurance, it can cover legal defense costs and court-awarded damages.
- Employee injuries. There are countless ways for employees to get injured on the job and require medical treatment and time off from work.
What you can do: Understand and follow all standard safety procedures, both within the industry and from the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA). Provide safety training to new employees as part of their onboarding process and refresher training to all employees as needed. Hold periodic safety-focused team meetings. Post safety reminders to keep safe operations top-of-mind. Most companies with employees are required to have workers’ compensation insurance. It can cover an injured worker’s medical costs and lost wages. In the event of a fatality, it can also provide a “death benefit” to family members.
Avoid business insurance claims
To minimize your company’s insurance claims, you must remain vigilant. Too often, businesses remain focused for a short time, see a reduction in claims, and then let their guard down, opening the door to increased incidents.
“To protect your business, you need to reassess your risks and review your insurance policies annually. That way, you can be sure you’re taking the right steps to reduce your ‘exposure’ and have the coverage and policy limits you need,” adds Shelley. “That’s crucial if you encounter circumstances like changes in your business operations or significant increases in the cost of the assets you’re insuring. Nothing feels worse than having the right policies but inadequate limits that leave you with an unexpected out-of-pocket expense.”
Continued vigilance will pay off in multiple ways. Avoiding incidents saves you money, but it also prevents distractions so you can keep your attention on the productivity and profitability of your business.