Insurance & LawStartups

External Factors That Affect Your Small Business

COVID, distracted drivers, and marijuana laws are all a risk to your small business

External factors can really hurt your internal operations

Read the true small business story below (names changed to protect the guilty) and ask yourself: If this was your business, would you suffer the same tragic fate?


Having lost her job at the very start of the pandemic, Meaghan took some of her savings and, bucking the trend of businesses closing during Covid, opened a small flower shop in a space that had previously been rented by a café. The landlord was happy to have an unexpected new tenant and gave Meaghan a great deal.

Meaghan immediately focused on discount home deliveries and, because she had both a great business idea and was a master at social media, was quickly able to use her social prowess to create a bit of a cult following.

Deliveries picked up, but not wanting to take on the expense of employees, Meaghan initially hired contract drivers to deliver her bouquets. But before long, with business blooming, she hired a driver and gave him her car for afternoon deliveries.

On Day 3 of his employment, Driver Dan got stoned while making his deliveries and got into a major accident, his fault.

Meaghan called her insurance agent and was informed that the accident and resulting damages were not covered by her insurance because

  • Dan was under the influence
  • The car was not registered to the business, and
  • Meaghan only had a personal auto policy and had not purchased a commercial auto insurance

Meaghan had also not gotten around to incorporating yet and as a result, she was on the hook personally for what looked to be a six-figure liability.

Meaghan closed up the shop and declared bankruptcy.


In her short small business life, Meaghan did a few things right but too many things wrong. Chief among them was assuming her personal auto insurance would cover the business use of her car.

Beyond that, Meghan, like so many small business people today, failed to take into account externalities must be accounted for when making business decisions generally, and insurance decisions specifically.

Here’s what we mean:

Distracted driving: Everyone has a lot on their mind these Covid days. Between unemployment, or being overworked, with kids at home, a legitimate fear of illness, or illness itself, and countless other issues, driving while distracted is all too prevalent right now.

Whether it is not paying attention, speeding, or reckless driving – by others or even your own employees, the roads are riskier right now.

And that means that if you have a business, like Meaghan, where you have commercial cars and drivers out there, you better be sure that you have the proper coverage lest you risk your employees safety, the safety of others due, and, frankly, your business.

Legalized marijuana: This is an amazing statistic: Between legalized recreational use and medical use, only three states completely outlaw marijuana today (Idaho, Nebraska, and Kansas.) In every other state, marijuana use to some degree has been legalized.

What this means for your business is that there is a far greater likelihood that an impaired driver is on the road near your car or fleet or drivers.

Are you protected? Do you have commercial auto insurance? Do you have enough?

Bottom line: These risks have little to do with the way you run your business, but they can definitely negatively impact your business. Make sure you are properly covered!


Protect what matters most. Business Insurance built for small businesses like yours. Request a quote now.

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