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, and 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 facing 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:
1. 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 been 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.
2. Management 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.
Management Liability insurance is created to assist in protecting the management and director roles when running a company. Unlike Professional Indemnity insurance, which protects the act of giving advice to clients, Management Liability insurance is all about protecting the running of your business.
There are a few types of claims that could affect the reputation of your business, with some of these being:
- Unfair Dismissal
- Defamation
- Bullying and harassment
- Unfair competition
- Breach of confidentiality
- Breach of fiduciary duty
- Misappropriation of trade secrets
Chances are, a scandalous claim could not only hit your bottom line as well as diminish your good name.
So along with covering legal and defence costs, claims investigation costs, some civil fines and penalties, Management Liability insurance can also offer a Public Relations component which will assist with protecting your business’ reputation by:
- Paying up to $50 000 to cover reasonable public relations fees and expenses to assist in mitigating the adverse effect on your business and its reputation in respect to a crisis event.
- Can pay up to $100 000 aggregate in public relation fees, costs and expenses if your business is involved with a Claim, Critical Regulatory Event or Investigation,
3. 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?
The Allianz Risk Barometer for 2018 identified that Cyber Attacks were the number one business risk within Australia and number two globally. 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, 60% of Australian cyber-attacks are aimed at SME’s (Dual Australia, 2018). 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.
