Business Insurance Isn’t Complicated

Business insurance isn’t complicated; break it down by these categories.

Often, we hear things like “business insurance is complicated and difficult to understand” or that it seems like many policies may do the same things in terms of coverage. Let’s break down business insurance in its simplest forms.

Buildings and Property

Property and Casualty insurance covers building and property. As simple as that seems, there are a number of losses that aren’t covered, such as flooding as one example. Just because your business is in leased space and not owned also does not mean you can go without property and casualty insurance. So, in addition, it’s possible you need to consider certain types of disaster insurance, like flood insurance. Ask your licensed insurance professional their recommendations and why.

Employees

Every business must have workers compensation in place to protect them if an employee is injured on the job. Some states also require disability coverage be provided. Meet with your licensed insurance professional to determine what coverage is mandatory.

There are a number of additional insurances available to business. Ask your insurance agent/broker about options available for your business. Have a frank discussion about what risks your company faces while conducting your day to day business.

Benefits like health and life insurance are not mandatory, but are put into place to attract and keep qualified employees.

Liability Insurance

Your general liability coverage will include legal fees and damages in a covered claim and/or lawsuit. Bodily injury, property damage, personal injury, and general damages are normally covered. Professional liability however, is written under a separate policy and is often referred to as Errors and Omissions insurance.

Vehicles

A commercial auto insurance policy will cover your business vehicles and their drivers. Again, while seeming quite simple, many business owners assume a variety of risks by using their cars and assuming a personal auto policy will cover any risk. Sometimes, the auto coverage can be combined with Property and Casualty in a Business Owner’s Policy.

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Use this as a guideline in reviewing options with your licensed insurance professional.

Do I need Workers Compensation Insurance

Do I need workers compensation insurance?

As a rule of thumb, the simple answer is yes, if you have even one employee. Now, workers compensation requirements differ from state to state with varying options. However, it is also prudent to carry workers compensation with even one employee if not required.

Workers compensation insurance covers medical, rehabilitation costs, and lost wages due to a job related injury or illness. Workers compensation benefits today are quite comprehensive and in addition to those noted, it also includes a death benefit. Unlike other insurance, there is no maximum dollar limit for the employer’s coverage. Required or not, the cost of a serious accident could financially cripple a business and it owners.

While again comprehensive and varying state to state, when the business carries workers compensation, the business is protected from a lawsuit by the injured employee as a result. This ‘no fault’ coverage allows for immediate medical attention and relief for the employer to ligation.

Failure to purchase required workers compensation insurance can be extremely costly. A business would be held to pay all the expenses and also face large fines and penalties. No prudent business owner should expose his business to such high risk. It is also important to note the definition of an employee. If you use subcontract labor take the time to determine how your state defines an employee.

Workers compensation insurance is complicated. Your state department of insurance can offer plenty of guidance and useful information. Talk to your licensed insurance professional as well and make sure your business is covered.

Insurance Benefits for Employees

Am I required to offer insurance benefits for employees?

The simple answer to this question is, no.

The only insurance you are required to provide is workers compensation insurance.  Workers compensation is required in every state but Texas.  Even so, many companies doing business in Texas require workers compensation as a condition for your business to do work with and for them.

We’ve covered workers compensation in other articles, but let’s give a simple explanation of it. Workers compensation protects employees who may be hurt while working, and will cover medical and rehabilitation costs and provide an income while recuperating.

In return, by having the coverage, you and the business are protected from being sued by the injured employee.  Obviously, this is a very simple explanation of this very import coverage.

Employee benefits differ from workers compensation as they are elective, both by the company, and those who may or may not participate. Employee benefits are offered as part of the employee compensation package.  Employee benefits for our purpose include life insurance, major medical insurance, disability insurance/short and long term, and dental insurance.

There are additional products which may fall into these types of insurance. Typically, the company may (or not) share in the cost of these insurance products and may sometimes offer them in a cafeteria style, or elective participation for some or all of the benefit insurance being offered.

Another employee benefit which may or may not be offered by the company is a 401K. There are retirement savings plans which willed be discussed in detail in later publications. They too are often provided by the insurance company who is doing the employee benefits package.

As your business grows, some type of employee benefit package should be developed to help retain and reward your good employees. Work with your licensed insurance professional for recommendations and options as your business grows. There are options and programs available for every size and type of business.

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