How to insure your business as it grows?

What risks come with a growing business?

exali: What new risks can arise as a business grows?

Sascha Pömmerl:
A successful and sustainably growing business is exactly what we want for our clients. But with a growing business naturally come new opportunities and challenges: more projects, more employees, greater demands on organisation and communication. There are many points of contact where mistakes can happen.

Without question, our policyholders know their own business best. However, it is frequently not major errors that lead to losses. More often, there are seemingly small oversights: someone makes a typing or calculation error, or overlooks something – and suddenly there is a damage event. The likelihood of this increases with the size and complexity of the organisation.

How am I liable as my business grows?

exali: What mistakes do self-employed professionals keep making when thinking about their professional insurance coverage at this stage?

Sascha Pömmerl:
In our day-to-day work at exali, we repeatedly see classic mistakes that freelancers and self-employed make:

• The misconception that a certain legal form protects you from liability.
• Some believe their potential liability is not that extensive – when in fact, statutory liability is always unlimited.
• Many also think they do not Professional Indemnity Insurance because they have run their business for years without mistakes.
• I also frequently encounter the idea that liability can be reduced through terms and conditions. In reality, this is only possible to a very limited extent – and ideally only with legal support.

Larger or more established companies are usually more aware of their liability risks. In such cases, it is important to check whether new areas of activity and sums insured still match the current situation. To ensure this, accurate information in the annual report to the insurer is crucial. Too often we read, “Everything is the same as last year,” and only upon further enquiry important changes come to light.

How can I review my business coverage?

exali: What steps should I take to check whether my existing insurance cover is still sufficient despite my business growth?

Sascha Pömmerl:
Review your activities and sums insured. What services do you provide for your clients, and does your coverage still match them? With Professional Indemnity through exali, the scope of covered activities is very broad thanks to All-Risk-Coverage.

Nevertheless, if you expand your field of activity as your business grows, you should also keep the insured activities in mind. For example: if, as an IT professional, you provide support in an engineering project, you can insure this under Professional Indemnity with additional modules. However, if you are solely responsible for designing components, this no longer falls within the scope of an IT activity.

There is no fixed formula for sums insured. It can help to imagine a worst-case scenario – but also question how likely it is to occur. Together, we can strike a balance.

How can I insure my business additionally?

exali: In what kinds of business changes are additional types of cover a sensible choice?

Sascha Pömmerl:
With the rise in cybercrime, having cover against cyber losses is a smart choice right from the start. Keep in mind that cyber incidents can have two directions of impact. Imagine you forward an infected email to your clients. They suffer losses as a result and can hold you liable – even if you had nothing to do with the criminal scheme and only forwarded the email with slight negligence. This type of third-party cyber damage is covered with the Financial Loss Liability as a part of Professional Indemnity.

The situation is different when it comes to cyber damage to your own business. Many of our products include the Additional Add-on for First-Party Cyber and Data Risks Insurance (FPC), which already covers many scenarios – such as the consequences of cyberattacks on your own business.

Are employees also covered under a Professional Indemnity?

exali: What is important for my Professional Indemnity Insurance when I hire employees? Are there differences between permanent staff, freelancers or, for example, working students?

Sascha Pömmerl:
Our product is very flexible here: permanent employees and working students are covered, as are freelancers. However, note this: if a freelancer makes a mistake, your business is covered by the policy. That said, freelancers should also take out their own coverage in case someone seeks recourse against them.

How can I insure my international work?

exali: What should I bear in mind if I want to work internationally in the future or integrate new business models?

Sascha Pömmerl:
What’s important is worldwide coverage in the Financial Loss Liability and the flexibility of the All-Risk-Coverage. However, in this context there are of course many detailed questions – especially relating to each policyholder’s individual business. At exali, freelancers and self-employed professionals based in the EU and Switzerland can be insured. As your Customer Consultants, we are happy to be your point of contact and will work with you to find the best insurance solution.

How can I insure my growing business even further?

exali: Aside from the right insurance coverage, how can I make my growing business more resilient to threats?

Sascha Pömmerl:
Of course, there are the basics, such as structured working methods, communication, documentation, and so on. Beyond that, much is a balancing act: naturally, you want to keep your clients satisfied. But to do so successfully, you must avoid overextending yourself.

Communicate your limits and capacity, and manage expectations where possible. An actual loss does not always have to occur – even an allegation or an unfounded claim can waste valuable resources. By communicating clearly in advance, you can prevent many of these situations.