A million bucks isn’t what it used to be. This becomes truer every day, especially in regards to insuring your small business. In the news recently, a man was awarded $5 million after two individuals tipped over a portable restroom while the plaintiff was inside. He was seriously injured, and claimed the restroom was poorly designed, not staked down properly, and placed in a bad location. The restroom would have not tipped over unless those two people had pushed it, however, the jury awarded a huge sum of money. 

Of course, this is an extreme situation, but with more stories of people tipping portable restrooms popping up in the news, your company could be in jeopardy. This example shows that anything could happen when unattended restrooms at a special event or units on a construction site where heavy-duty machinery is being operated increase the risk of injury to restroom users. And it also demonstrates that you don’t have to be completely at fault in an accident to get hit hard by insurance claims. 

Vehicle accidents also can easily create large claim costs and awards. Umbrella insurance covers those costs that exceed the primary auto policy limits. So once the primary policy is exhausted, the umbrella coverage kicks in to cover remaining costs. 

For example, if your primary auto insurance policy limit is $1 million, then you are covered for up to $1 million of damages. If you have a covered claim that exceeds the auto liability limit, your umbrella policy steps in to provide additional coverage. 

If you have a large insurance claim and you do not have an umbrella policy, your carrier can simply cut a check for $1 million for you to handle the claim and associated expenses. You would be responsible for everything including an investigation, defense and the jury award. Even if the insurer sticks around for investigation and defense, and you are found to be at fault, once your $1 million is spent, the insurer is done. You are responsible for the rest of the expense. You are left to negotiate with the other attorneys, on your own, or with an attorney you must hire. 

You should have the highest umbrella coverage limits you can afford to prevent these situations. Another way to look at: How much is your business worth to you? If you are a small startup business, it may not be worth buying the extra coverage. But keep in mind, it will only cost about $750 per year for an extra $1 million of coverage. If the claim damages exceed your insurance limit, be prepared to hand over all your trucks, equipment and buildings to the people you injured to cover those costs. 

Of the 300 portable restroom and septic businesses our company insures, about 10 percent have no umbrella or excess coverage, 60 percent have an additional $1 million in coverage, 20 percent have between $2 and $4 million and 10 percent have between $5 and $10 million of coverage.

Many small business owners do not have as much coverage as they should, but needs will vary based on the size and location of your business, your company’s net worth and driving records can play a role. You just need to buy as much as you feel is necessary and that you can afford. You won’t know what you actually need until it’s too late, so expect the best, but prepare for the worst.   

If your driver gets distracted for a second when the driver in front of him locks up his brakes, it will be too late to get the coverage you need to fix the truck and pay for the medical bills of the injured victims. Will your driver be the one who reacts too slowly? 

So how much coverage do you need? Have a long and serious conversation with your insurance broker about how much coverage you need, before you have a claim. 

About the Author
Mark Herring is vice president of Heffernan Insurance Brokers. Reach him at markh@heffins.com.