Insurance for Employers

Insurance for employers, what you need to know in designing your plan.

Owning a business and hiring employees can be extremely rewarding. It also can be extremely time consuming and sometimes even financially challenging. Having people depend on you and the business to make a living comes with a great deal of responsibility.

Let’s first look at required insurance that needs to be provided for employees. Almost every state requires that you have workers compensation insurance in place when you hire employees. The actual requirement varies state to state, but it is recommended to put it in place with even one employee.

Workers compensation in the simplest definition protects the employee in the event of a work related injury or illness. Medical costs, rehabilitation costs, and income replacement as well as a death benefit are provided. In return, the business is protected from a lawsuit from such an injury or illness.

It is best to talk with your state department of insurance and a licensed insurance professional to determine specific coverage and requirements for you business. Several states also require some form of disability insurance for employees. Again, discuss this with your insurance professional.

Employee benefits include types of insurance which include health insurance, dental, disability, life, and possibly others. While not required, employee benefits help attract and retain good employees to help grow the business. Business owners also benefit as they are part of the benefit plan and there are also tax advantages to offering employee benefits.

Most small business will design a very basic employee benefit package to start. This package will usually include medical insurance and perhaps dental insurance. A shared cost with the employee is quite common. Supplemental insurances may be offered as part of the package and may be 100% employee funded.

As you grow your business and the number of employees, you can redesign your benefits package. With a higher number of employees come generally greater options and programs. Work on plan design from the onset with your licensed insurance professional.

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Key Employee Insurance

What is key employee or key man insurance?

Key person insurance is a business insurance policy which is taken out to protect the business from the loss or long term incapacity of a key executive or employee of the company. While there is no clear definition, this form of business insurance has become very popular and sometimes required by a lender to secure financing for the business.

By purchasing key person insurance, a business compensation for financial losses in the event of the death or disability of a key employee. This insurance will also allow for business continuation during the hiring and training of a replacement. By minimizing the impact of the death or loss of a key employee due to disability, creditors, customers, and employees are assured the business can continue to operate with minimal impact and operating as usual.

Often used to insure management and ownership, key person insurance is being used more and more to insure employees whom make significant contributions to the operation of a business. For instance, a top sales person who represents a high percentage of the company’s revenue may need to be considered for key person insurance. Another example may be a service person that outperforms their colleagues or may have a specialty no one else may have.

Key person insurance is sold as life insurance and also as disability insurance. The business is the beneficiary of the policy which may then use the proceeds as necessary to continue operation of the business.

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It may be time to ask your licensed insurance professional about key person insurance and business continuation planning. Your insurance professional can help you in evaluating who may need coverage and what value should be placed on the policy.

Commercial Insurance Myths

There are many myths about commercial insurance you need to know and understand.

From time to time, almost every business owner asks themselves, “Do I really need commercial insurance and keep paying this premium?” The answer is always the same, “YES!” No matter the rationale, no matter the explanation, the bottom line is every business needs insurance. Exposing your business to risk, no matter never having a claim is not the way to go.

Myth number 1: “No one will ever sue my business.”

This often sounds like, “You can’t squeeze blood from a stone.” Or any number of similar statements. The fact is every business and everyone can be sued. Once a judgment is rendered, a persistent attorney can file a judgment lien which doesn’t go away. Assets can be frozen or seized and wages garnished. In fact, lawsuits are on the rise. Not having the proper insurance coverage to defend against a lawsuit is playing Russian roulette with your business’s future.

Myth number 2: “I set up a corporation, I am 100% protected.”

Facts what they are, a corporation protects the officers and owners from actions or damages against the corporation. However, that corporate shield can be pierced or even stripped and a business owner held liable personally. A business and its owners are legally liable for any action that hurts others. Even if a company is incorporated, owners can be sued personally for their own actions in the company. They risk losing their personal assets and perhaps even their home if a liability lawsuit against them is successful. Without doing a case study, the smaller and newer the corporation, the more likely this could happen.

Myth number 3: “Nothing will happen to me.”

This is a big one, it sometimes sounds like, “If something happened to me the business will take care of my family.” Most businesses don’t survive the death of a principle. Often, the business is dissolved to pay off obligations. This leaves the family and the employees of the business devastated. Have an exit strategy and contingent plan in place and fund it through business insurance.

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Beauty Shop and Salon Insurance

Like most retail businesses, it is important to have good business insurance in place to protect the owner, the employees, and the assets of the business. It’s extremely important to have the business insurance in place prior to opening the business.

No matter whether a salon, spa, or a combination of services, every business needs to have the proper insurance. Three basic insurance needs any retail business will have is general liability, property insurance and if there are employees, workers compensation. In addition, we’ll look at some insurance coverage that a spa or salon should also carry.

First, let’s review general liability insurance. General liability insurance will cover the business in the event a lawsuit is brought for personal or property damages. Say someone falls in the lobby, the general liability insurance would cover any legal fees, court costs, and judgments against the business.

Second, is the property insurance for the business. Generally, property and casualty insurance is combined for the best value. Property insurance will cover losses from damage to the building or its contents. The salon or spa can be in either owned or leased space. Casualty coverage will insure against losses or damage to the business.

Worker’s compensation insures your employees for any on the job injury. This policy will cover medical treatment, rehab, and pay a portion of earnings until the employee returns to work. In return for this type of coverage, in most cases it prohibits the employee for suing the business.

Two other forms of liability insurance should be considered by the spa or salon owner. The first is professional liability insurance. If a client sues for damages as a result of worked performed, or negligence, the general liability policy may not cover this claim. The second type of additional liability insurance is product liability insurance. If the salon or spa is selling products to clients for home use, this coverage should be seriously considered, even if the products are not manufactured by the business.

Salon and spa owners need to work with a licensed insurance professional to best determine the proper coverage for the business. An insurance professional will walk you through thought the types of coverage available and how best to develop an complete insurance package.

Insurance Planning

The biggest insurance planning needed.

Several years ago, you took a risk and started a small business. Through many lean moments, long hours, and perseverance, your business is growing. You’ve added some employees and now can actually take a vacation again with the family. But is everything really in good shape?

A sad fact of life is people die, even successful small, medium, and large business owners. Another real sad fact is these business owners never thought about what would happen to their business, their employees, and their families if they did. In fact, they mistakenly believe the business will take care of their family and itself when the reality is many, many businesses just die along with the owner because of a lack of planning.

You have a lease or a mortgage, capital loans, payroll and other obligations which need to be paid. You may have some personal life insurance for your family but can your estate be held liable for expenses owed by your business? Do you have partners or investors in your business? If you die, can your spouse assume your role in the company? How quickly? What will stop your employees from jumping ship and taking clients and even assets with them?

Every business needs a continuity plan in place funded by life insurance for the owners and investors. A ‘Buy–Sell Agreement” in place will insure your spouse and family are taken care of and your business will have a far better chance of succeeding.

The Buy-Sell Agreement will purchase the value of your ownership from your spouse while allowing the remaining partners to focus on the day to day operation of the business. If you’re a sole proprietor, a succession plan will essentially work the same way. Insuring the obligations are met and your family taken care of through life insurance.

Sit down and have the difficult discussion of developing a succession plan and strategy to put into place in the event of a premature death. Your licensed insurance professional can show you various scenarios and how to have adequate funds through life insurance to finance these options.

Small Business Insurance Plans

Insuring your small business is a must to protect the assets of both the business and the owner. Any business will be exposed to a variety of risks. Two major areas of coverage needed are property and liability. Both of these types of coverage and more are available as separate policies or combined in a business owner’s policy.

Business property insurance will cover buildings and contents, and some equipment. Inventory and office furnishing for example will be covered. This coverage will cover for damage from accidents, thefts or fire. It’s important to note that certain property damage from natural disasters like flooding, hurricanes or earthquakes may need separate insurance. It is important to work with your licensed insurance professional to determine what coverage is included and what risk may still exist.

General liability insurance protects the business against a lawsuit for personal injury or property damage. It will cover the cost of the lawsuit as well as damages. No matter how much care is taken, a client can perceive your company did them wrong. One lawsuit and award of damages can financially ruin any size business.

Talk to your insurance professional about combining these insurances if possible into a business owner’s policy, or BOP. In addition, other coverage such as business interruption or crime insurance may be added.

It’s important to understand that professional liability, or errors and omissions insurance is not included. Talk to your licensed insurance professional to determine if you need E & O insurance. Understand what is covered in your business insurance and what is not. Ask specifically for the inclusions and exclusions of your small business insurance. Together, determine the most affordable and comprehensive insurance package for your business.

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General Business Liability Insurance

A common question among business owners looking at insuring their company is; what types of liability aren’t covered by my general business liability insurance policy?

General liability insurance is the most prevalent form of business liability insurance. These policies are designed to protect your business against occurrences where someone alleges they were injured or their property was damaged as a result of your company’s negligence.

Your general liability insurance excludes some types of liability coverage, Workers Compensation, professional liability, liability related to operating an automobile or truck, and corporate directors and officer’s liability. These liabilities are covered by other specially created policies to protect your specific business.

Most general liability policies will also exclude coverage against claims of pollution.  Businesses using toxic materials in the manufacturing process or that store or transport them must purchase a special environmental liability policy. Many businesses keep gasoline on the premises for their own use, but because storage tanks can leak over time, allowing gasoline to seep into wells and other water supplies, federal law requires all tank owners to have insurance or show some other means of paying for potential claims. Also excluded are claims resulting from damage to the property of others in the business owner’s care, custody and control. This is because coverage for such damage is covered under property policies.  Talk about chemicals and usage as well as storage and transportation in detail with your agent or broker.

Any products produced or sold are generally not covered by a general liability policy.  Product Liability insurance is sold as a separate coverage.

The most common exclusion for the typical general liability insurance policy is claims of professional negligence or Errors & Omissions. If damage resulted from serious negligence on the part of a client or an employee, your general liability insurance will not cover the suit.  In this instance, professional liability insurance, also known as Errors & Omissions insurance, will cover a claim of negligence.

Review your liability coverage in detail with your licensed insurance professional.  Take the time to understand what is covered, and most important, what’s not.

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For a quick, free quote, click ‘Get a Quote’ above or call 1-877-907-5267 to speak with one of our specialists to learn more about what your business needs in terms of general business liability coverage.