​One of the keys to managing risks when you first start a business is getting the right insurance to cover your operations, property and potential liabilities.
Unfortunately, many business owners fail to update their policies and just renew them year after year even if the company has grown, expanded operations and facilities, and added new equipment and property. If this is the case, the old coverage would be insufficient.

Business owners should review their policies every year to catch any omissions and make sure they are not underinsured. It is common for smaller businesses to secure a basic business owner's policy (BOP) and workers' comp when they first get started. A BOP includes:

• Property insurance for buildings and contents owned by the company.
• Business interruption insurance, which covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business.
• Liability protection, which covers your company's legal responsibility for the harm it may cause to others. This harm is a result of things that you and your employees do or fail to do in your business operations that may cause bodily injury or property damage due to defective products, faulty installations and errors in services provided.

 
Outgrowing BOP coverage
As your business expands, you may outgrow the BOP and need additional coverage to manage your risks. Some examples include the following:

• Workers' comp. While you likely added a workers' comp policy when you made your first hire, you will need to update it as you add more staff. If you don't, when your insurer audits you, you may face a hefty bill for additional premium. Be diligent about your policy and inform your insurer as you grow.
• Excess umbrella or liability coverage. You should consider this insurance to cover claims that exceed your BOP's limit, providing you with an added layer of protection to protect your assets.
• Professional liability insurance. These policies provide coverage for mistakes for any professional services you provide. This used to be mainly for doctors, attorneys and accountants, but as our service sector has expanded it includes services provided by coders and software developers, appraisers, consultants, real estate brokers, graphic designers and home inspectors, among others.
• Auto, non-owned and hired coverage. This protects business owners if an employee has an accident while driving a rental or personal vehicle on the job. 
• Employment practices liability insurance. This covers human resources issues related to discrimination, harassment and termination.
• Commercial auto insurance. This coverage protects autos that are not under a personal policy.
• Directors and officers liability coverage. This protects officers and directors in the event they are sued for wrongful acts while on duty.

 
Depending on the business, some or most of these insurance options may be required for adequate protection. Annual reviews with us are ideal for discussing your options. Make sure these elements are considered:

• If computers, equipment or other types of property have been added, this would be reason to increase policy limits.
• While revenue is an important consideration, it is also important to remember that it is a potential liability. 
• A general liability or BOP may be affected if the owner has moved, added or closed locations.
• Hired and non-hired auto insurance is necessary if workers are driving frequently in rented vehicles. 
• For specific types of work and services, employers may need additional endorsements for their general liability policies.
• People who are serving new industries or clients may have problems with their professional liability coverage if they have large amounts of high-risk industries or customers.
• If you experience an increase in the number of workers you have, or there is a higher turnover rate, it is important to think about employment practices liability coverage. And as mentioned, your workers' comp policy should be updated to reflect any staffing changes and that you categorize your workers properly.

​As the economy continues expanding, companies need to be careful about properly managing their risk, according to a report by Advisen Inc., an insurance research and data firm.
Increased activity typically means proportionally additional losses. For example, more trucks driving more miles will inevitably result in more accidents. However, there are other kinds of risk that can actually increase more than the jump in business activity. We look at three such areas here.
 
Workplace safety
Workplace injuries can increase as firms hire workers that have less experience. Typically, when employers expand their workforce to meet the growing demand for their products and services, the number of workers' compensation claims tended to rise disproportionately.
New employees with less experience typically are more likely to sustain a workplace injury. At the same time, experienced staff may look for new job opportunities as compensation begins to take priority over job security.

What you can do: One option is to hire a temporary-staffing firm to fill positions. In these relationships, the client company is not responsible for covering temporary workers.
But you should be aware that OSHA requires what is known as the "dual employer doctrine", under which temps are considered employees of both the agency and the company using them. And you are also not off the hook for providing them with a safe work environment and safety training specific to their job.
And remember: Check to make sure the temp agency has workers' comp insurance.
 
Litigation increases
The risk of being sued rises as employees make mistakes due to pressure on existing staff to increase production, and again when less experienced workers are added to the payroll.
Your workers may be putting in extra hours. But fatigued workers make mistakes. For example, some of the worst industrial disasters have been in part the result of tired workers. Bhopal, Chernobyl and the Exxon Valdez oil spill all involved decisions made late at night or extremely early in the morning by people working long hours.
In addition, inexperienced employees are more like contribute to incidents where outsiders are hurt.

What you can do: Conduct thorough interviews, check references and carry out background investigations when appropriate to avoid hiring people with known problems. You are responsible for the actions of your employees.
Also, make sure that you are not overworking your staff. Provide proper breaks so they can rest, especially in jobs that require attention and strength.
 
Labor law violations
Trends in litigation and regulation make it more likely that companies will be charged with labor law violations. Employees are braver now about filing complaints, thinking they have a good chance of landing a new job if they are fired.
In addition, the federal and many state governments have cracked down on wage and hour law violations.
As well, some companies may try to add to their worker pool by using more independent contractors, in order to avoid hiring new workers. But the federal government has mounted a serious crackdown on companies that inappropriately classify employees as independent contractors.

What you can do: Pay close attention to your payment systems and audit your systems to make sure you comply with wage and hour laws as well as meal and rest break laws.
 
The takeaway
The lesson is to increase your vigilance in managing your risk and review your existing risk management strategies for gaps due to business growth.
You can take the following steps to reduce your chances of increased claims:

• Maintain high standards when hiring new employees, such as conducting thorough interviews, checking references and, where appropriate, investigating backgrounds;
• Properly train and supervise new employees during a growth phase;
• Consider your current policies on temporary workers, and weigh the benefits of a flexible workforce against liability issues that temporary workers pose;
• Revisit your policies about independent contractors, especially in light of the U.S. Department of Labor's efforts to ferret out misclassification;
• Pay attention to overtime rules to ensure compliance with the law; and
• Keep shareholders informed as much as possible about any mergers or acquisitions, including terms of the transaction.