As your business evolves, so do the risks – and foundational policies often don’t reach the complex exposures that come with growth. With your essentials covered in Part 1 and the cost mechanics clarified in Part 2 of this series, it’s time to address the protections your core policies leave out.

Many of the risks in this section show up as exclusions in your foundation policies – meaning they won’t be covered unless you add specialized protection.

1. Professional Liability (Errors & Omissions)

What it is: Protection against claims of negligence or mistakes in the services your business provides.

Why it matters: General Liability covers physical injury. Professional Liability covers financial harm caused by your services or advice. Without E&O, even a small professional mistake can lead to six-figure financial loss – none of which General Liability covers.

Who needs it: Consultants, architects, engineers, IT professionals, accountants, marketing agencies, financial advisors – anyone providing expert advice.

Example: A web firm builds an e-commerce site with a security flaw leading to a data breach. The client sues for $200,000. Professional Liability covers the defense and settlement. General Liability won’t cover professional mistakes.

2. Employment Practices Liability Insurance (EPLI)

What it is: Coverage protecting against claims of discrimination, harassment, wrongful termination, and employment-related issues.

Why it matters: Even small businesses face HR lawsuits. Defense costs and settlements easily reach six figures.

Common claims: Wrongful termination, discrimination, harassment, retaliation, failure to promote.

Example: An employee files wrongful termination and age discrimination claims seeking $350,000. Even though dismissed, legal defense costs $80,000. EPLI covers it all.

3. Directors & Officers (D&O) Insurance

What it is: Protection for company leaders against claims of mismanagement or wrongful acts while running the business.

Why it matters: D&O shields owners, officers, and board members from personal financial loss if named in lawsuits related to business decisions.

Who needs it: Businesses with boards, outside investors, multiple partners, or nonprofits where board members need personal protection.

Example: Investors sue founders personally, claiming they misrepresented financial health. D&O covers legal defense and settlement, protecting personal assets.

4. Cyber Liability Insurance

What it is: Coverage for data breaches, ransomware attacks, and cyber threats.

Why it matters: Cybercriminals target small businesses because they often lack security but hold valuable data.

What’s covered: Breach response, ransomware payments, business interruption, legal fees, regulatory fines, forensic investigation.

Example: An accounting firm’s phishing attack compromises tax records for 200 clients. Notification costs, fines, and lawsuits total $175,000. Cyber Liability covers it. Without coverage, the firm closes.

Critical note: Standard property insurance does NOT cover cyber losses.

5. Inland Marine Insurance

What it is: Coverage for tools, equipment, and materials that move from job site to job site.

Why it matters: Standard property insurance only covers items at your business location. Inland Marine travels with you.

Who needs it: Contractors, plumbers, electricians, HVAC techs, landscapers, photographers, caterers – anyone transporting equipment.

Example: A contractor’s truck is broken into and $15,000 in tools are stolen. Inland Marine replaces everything. Without it, the contractor pays out of pocket.

6. Umbrella Insurance / Excess Liability

What it is: Secondary liability coverage that sits on top of a primary policy. Your primary policy pays first, and once it reaches its limit, the excess (umbrella) policy provides additional protection up to its own separate limit.

Why it matters: Serious accidents can exceed standard policy limits. Once your primary policy maxes out, you could be personally liable.

Example: A delivery driver causes an accident with $3.5 million in damages. Commercial Auto pays its $1 million limit. Umbrella covers the remaining $2.5 million. Without it, personal assets are at risk.

Value: Umbrella coverage is surprisingly affordable (often a few thousand annually) for massive protection.

Important note: Umbrella policies must be purchased for each underlying policy. One umbrella won’t automatically apply to both General Liability and Commercial Auto unless those policies are packaged together, which is not typical.

7. Business Interruption Insurance

What it is: Coverage for lost income and expenses when your business can’t operate due to a covered event.

Why it matters: Property insurance replaces damaged property. Business Interruption covers the income you lose and ongoing expenses during repairs.

What’s covered: Lost income, rent, utilities, payroll, temporary relocation, expedited repairs.

Example: A restaurant fire forces a three-month closure. Property insurance pays $100,000 for repairs. Business Interruption covers $85,000 in lost income and $40,000 in expenses. Without it, bankruptcy.

Note: Often included in BOPs but must be added to standalone property policies.

The Cost of Waiting

Coverage gaps only become obvious when you file a claim. By then, it’s too late.

You can’t add coverage after a client threatens to sue, after you’ve been hacked, or after an employee files a complaint.

Close these gaps now – before you need the coverage.

Don’t Wait for a Wake-Up Call

At MartinoWest, we’ve seen too many business owners learn about gaps the hard way.

Let’s talk about your risks:

• Which specialized coverages does your business need?
• Are there hidden gaps in your policies?
• How can you get protection without overpaying?

Schedule a risk assessment and we’ll review coverage, identify gaps, and build a complete protection strategy.

Because the best claim is one that gets paid – not denied because you didn’t know you needed different coverage.

MartinoWest: Simplifying insurance so business owners can focus on building and growing their business.