In my 18 years as an insurance agent, I’ve been blessed with the opportunity to work with many small businesses in a myriad of industries. No matter the industry, however, there are some coverage basics that apply universally. The purpose of this article is to address those coverage types and hopefully assist both current and future business owners in constructing an insurance program that best suits their particular companies.
Property Coverage Whether you own a building or rent, your business probably has tangible property. Depending on your business, this property might be stationary (i.e., a retail store or beauty shop) or it might travel to your customers (i.e., a landscaper or wholesale distributor). Furthermore, the value of your property might be stable, fluctuate seasonally or change as the business grows. It is important to fully discuss these varying exposures with your agent frequently and be comfortable with the chosen limits.
Liability Coverage Every business, no matter how small, has liability exposures. If you’ve never had to fully describe your business to your agent, chances are that you are not adequately protected for liability. Exposures range from your premises to your products to the services you provide. If you provide some kind of service or advice that requires a license, you may have a professional liability exposure that an off-the-shelf general liability policy will not address. Hiring employees creates an employment practices exposure, and providing those employees with benefits creates an employee benefit exposure. Owning or renting vehicles creates another, potentially sizable exposure. Maintaining a client database or conducting e-commerce presents privacy or cyber liability exposures. Addressing all of these exposures may require multiple policies. Bottom line, it is important for every business to align itself with a capable commercial insurance specialist to construct the proper liability coverage to protect the business and personal assets you work so hard to build.
Workers’ Compensation Coverage Except in rare cases, an employer is always held responsible for injuries or illnesses sustained by employees while working on the employer’s behalf. Owner exemptions notwithstanding, for businesses in the construction industry, the state requires a company to purchase workers’ compensation coverage when it hires its first employee. For non-construction businesses, coverage is not mandated by the state until a business employs four or more employees (keep in mind that part-time employees count the same as full timers). That being said, even if coverage isn’t required by the state, the employer is still responsible for an employee’s injury or illness related to the job.
Benefits Per the Affordable Care Act, small businesses with less than 50 full-time employees are not penalized for electing not to offer health insurance coverage. That said, many do in order to attract and retain employees. A wide variety of options exist when it comes to employer-sponsored health plans, and pricing for the employer is wholly based on factors such as employee demographics (i.e., age and zip code of residence), the richness of the benefit plan selected and the insurance carrier quoting the account. Coverage for ancillary benefits such as dental, vision, disability and life insurance are also available on an employer-funded or “voluntary” basis.
Today’s small business owner wears many hats and has practically endless responsibilities. However, making time to work with a qualified insurance professional to address all of the aforementioned types of insurance is imperative for any business owner who desires to be successful in the long run.