When it comes to running a small business, your brand and its reputation are priceless. No doubt you’ve spent countless hours establishing your name by building strong relationships with your customers and clients, but it can take just one small mistake to destroy your business in minutes. As Warren Buffet famously said, “it takes 20 years to build your reputation and five minutes to ruin it”. In the event that an unforeseeable event occurs and something goes drastically wrong what would you do, and how would you cope with your business reputation in the event of a meltdown?
Sometimes it would be nice to have a crystal ball and prevent accidents and incidents from happening, but unfortunately, it’s not possible. You can, however, get some peace of mind with insurance policies designed to help protect your business if its reputation is on the line.
Here are a few to consider:
Professional Indemnity Insurance
If your business provides a professional service or advice, such as an accountant, architect, real estate agent or beauty therapist, you have a big responsibility towards your clients. A simple error in providing the wrong information to a client, failing to provide a promised service, or even being falsely accused of making a mistake, can be eye-wateringly costly, not only to your finances but your reputation too. And let’s face it, we are all human and mistakes do happen.
Fortunately, Professional Indemnity insurance is designed to protect your business should you or your staff make an error, omission, or, breach of your professional duty in the course of your business. Not only does it help pay for your legal defence and any judgments or settlements that you or your business may have to pay to compensate the suing party, it also offers coverage for public relations expenses to help prevent or minimise reputational damage whilst your business is under scrutiny.
Employers Liability Insurance
Being the director or part of a management team comes with its challenges and occasionally those ‘unexpected’ surprises that you weren’t expecting. Whilst we all go to great lengths to ensure a safe working environment, and no matter how much we plan, accidents do occur.
Employers Liability insurance protects you against settlements or damages, including defence costs, as a result of an employee suffering bodily injury arising out of his or her employment where the Accident Compensation Commission (ACC) does not provide cover.
There are a few types of claims that could affect the reputation of your business, with some of these being:
- Occupational stress and mental injury
- Nervous shock or fright
- Heart attack or stroke caused by stress
- Disease arising from circumstances where the employer has failed to provide a safe workplace
Chances are, a scandalous claim could not only hit your bottom line as well as diminish your good name.
Cyber Liability Insurance
Can you imagine trying to run a business without the internet? Pretty much impossible right?
Think about all the ways you use it from running an e-store, to processing payments to simple things like email, the online sphere is well and truly a part of our daily lives. But what happens when the threat of your business’ cybersecurity is jeopardised?
Attacks can occur very easily and have devastating effects on a small business. Some of the examples that could send your business’ reputation into chaos include:
- Ransom attack
- Privacy breach where customer information like contact and credit card details are released
Unfortunately, hackers are out there, and small to medium-sized businesses are prime targets. In fact, Microsoft reported that cybercrime over NZ computers and networks has more than doubled over the last five years, with one in five Kiwis affected each year at a cost of $257 million in 2016 alone (1). . If your business were to be the victim of a cyber attack, Cyber Liability insurance is there to help by providing coverage for expenses and legal costs (which can add up very quickly and become very costly). Something as simple as a staff member accidentally leaving a laptop on the train could amount to a costly data breach. The policy also extends to cover expenses including the costs of business interruption, forensic investigation, data recovery and even extortion costs.
In addition, another great benefit of Cyber Liability insurance is that it includes cover for the reasonable costs and expenses for receiving advice and support from a public relations team to protect or mitigate any damage to your business’ reputation.
Even a seemingly innocent mistake could end up costing your business hundreds of thousands of dollars in expenses. So, having insurance for your business is not only about ensuring that you have the money to help you continue operating after a catastrophic event. It also helps ensure that you maintain the same great reputation you’ve worked hard to establish and that your customers keep coming back.
This is general advice only.