Running a business can be exceptionally complex for many different reasons. Commercial property is unique compared to residential locations, the nature of some businesses invite more liability concerns than others, and the world itself can be incredibly unpredictable, as we all have seen.
For the most part, however, commercial property solicitors can help a business identify potential risks with their office, a retail establishment or any other place of business and develop a tailored insurance plan that works around them beyond the legally required employers’ liability insurance.
However, because of the nature of risk as being an agreement to insure against a specific type of adverse event, certain types of risks are harder to insure against than others.
Here are some examples.
It is quite tricky to quantify or tangibly define ‘reputation’ despite how important it is to businesses and exactly how you can define ‘damage’ to a brand’s reputation, which means that many insurers are reluctant to offer specific insurance that protects against a damaged reputation.
However, if you focus on the quantifiable aspects that can cause damage to reputation, such as crisis management, business owner liability insurance as well as, especially more recently, insurance covering cyber threats and data breaches, which can include sensitive and reputation-harming information.
For larger businesses, reputational risk coverage can sometimes be underwritten, but this often involved prohibitively expensive insurance premiums.
High-Risk Natural Disasters
If your business is located in an area that is prone to frequent natural disasters to the point that it could be seen by insurers as an expected risk, they will likely refuse to insure the property.
This primarily includes businesses located in flood zones, on the coastline or in areas where property damage is common.
Another example of this is pandemic risk, which whilst primarily linked to disease pandemics, could also refer to any widespread black swan event which was unexpected and unknowable.
One common risk that businesses need to manage is the change in regulations that alter how they do business, often designed to help protect the public.
As these are difficult to predict and even harder to quantify, insurers typically do not insure against a business being regulated out of business.