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Archive for May, 2011

Insurance Benefits for Employees

Wednesday, May 18th, 2011

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.

Commercial Liability Insurance

Tuesday, May 17th, 2011

Do I need commercial liability insurance for my business?

Property insurance, workers compensation and general liability coverage are needed by most businesses.  General liability insurance protects the business and its assets when it is sued for claims of bodily injury or damages to property of others.

In this day and age of businesses being sued on regular basis, even a small incident or mishap could result in a lawsuit. General liability insurance will cover the costs of defending and litigating a claim brought against the company. The coverage will pay any damages or compensatory awards the business is legally obligated to pay up to the coverage limits. General liability insurance does not however cover punitive damages.

The coverage amount needed is determined by a variety of factors. These include the type of business, types of equipment, and even the general area where the business is located.

Work with your licensed insurance professional to determine the coverage needed. The coverage will generally specify a maximum paid per time period and a maximum per occurrence. For example, if a business has 1 million dollar per occurrence and the business received a 1.25 million judgment against them. The insurance would cover 1 million dollars of the judgment and the business would be responsible for the $250,000 remaining.

General liability insurance will help to keep the doors of the business open and operating in the event of lawsuit and judgment against the business. Your licensed insurance professional will be your guide in helping you to determine the correct amount of insurance and type of coverage needed for your business.

General Business Insurance

Monday, May 16th, 2011

Proper general business insurance is necessary and important to your business.

Starting a business is an exciting and very busy time. There is so much to do to get ready for the big day when you open your business. Often, entrepreneurs make the mistake of believing it’s just another expense and spend no time considering coverage and options.

That can be a costly mistake down the road for your business.

Your general business insurance should be unique to your business. There is no cookie cutter policy which covers every business exactly the same. In fact, just the opposite is true. Designing the proper business insurance coverage takes both time and effort long before that opening day.

No matter what your business, there are some basics to consider. Work with your licensed insurance professional along the way to determine how these will be designed and implemented to best protect your business. The basic coverage needed by any business will be general liability insurance, property insurance, and if you have employees, workers compensation. Automobile insurance falls under the property insurance label, but is often a separate policy.

General liability insurance protects you and your employees from legal and medical costs associated with claims that your business or its workers caused bodily injury or property damage. Some businesses also warrant professional liability insurance which is also known as E & O insurance. Professions like realtors, architects, attorneys are just a few.

Property insurance will protect the assets of the business including building and equipment. Business automobile or fleet insurance is generally needed as part of your property coverage.

Workers compensation insurance is required in almost every scenario when you hire your first employee. This protects both the employee and employer and should be reviewed with your licensed insurance professional.

Don’t risk the assets and reputation of your business by not taking your general business insurance as important as your marketing campaign. It is a necessary and important piece of any business planning and structure.

Commercial Business Insurance

Sunday, May 15th, 2011

Do I really need commercial business insurance or can I get away without it?

Putting a commercial business insurance package in place is a lot more than just a strategy to protect your company, and provide peace of mind. It will allow you and your business to remain viable and competitive in the event of an accident or disaster.

Many business owners opt for the cheapest commercial premium and minimum coverage while exposing themselves to some pretty high risks. Others still, over pay and over insure their business. Avoiding these extremes is simple if you bring in a licensed insurance professional to review and advise you on your commercial business insurance needs.

Paying commercial insurance premiums seems like a burden with no real return. The real question here is whether you can afford not to have the protection in place. No one has a crystal ball where they can predict the next natural disaster or accident by you or one of your employees. Preparation is far better than facing financial ruin form one event such as a hurricane or fire.

The overwhelming monetary expense of fighting a lawsuit from an accident or claim against your product or service as well as the mental anguish and stress produced. Would your business be able to survive an event like Hurricane Katrina or the aftermath? The serious and deadly Ice Storm of 1998 that wreaked havoc on northern states for up to 10 days, where many buildings were without power and had water mains and pipes burst.

Could your business move and reopen at a different location in a reasonable time? Is my liability coverage sufficient to cover a significant claim and allow you to maintain focus on your business?

Work with your licensed insurance professional to find the proper coverage for your situation. Then, at least annually, review the coverage in place and provide your agent with what is new and happening with your business. Make sure to advise them of any expansion plans or new product or service offerings. Give them the information needed to protect your business as you grow it.

Commercial Insurance - Replacement Cost vs Actual Cash Value

Saturday, May 14th, 2011

Commercial Insurance - Replacement Cost or Actual Cash Value, what’s best for your business?

Like any insurance, commercial property insurance will come with different options for coverage. Whether you are insuring the building, the business property or any combination, a variety of options are available to pick from. It is important to understand how the property is valued at the time of a loss, and whether replacement cost or actual cash value was chosen.

Replacement cost is coverage which will pay with “Like kind or quality” up to the policy limit in place. Guaranteed replacement isn’t normally found in commercial insurance, but if you are fortunate enough to have that coverage, the loss will be covered to replace the building to its original state, even if it means exceeding the policy limit. Remember, it’s like kind or quality. If you had carpeting, the policy isn’t going to replace with mahogany or bamboo flooring or imported Italian tile.

Actual cash value is the cost of repair or replacing the property less depreciation. Depreciation is the loss in value of the property due to time and wear and tear.

Choosing which type of coverage for your business is difficult. Normally, Actual Cash Value is less expensive than Replacement Cost. The difference in premium can be substantial. Sit down with your licensed insurance professional and determine scenarios and risk. Meet with a commercial contractor and ask for an estimate for rebuilding.

Remember, no matter which option you decide on, review the exclusions carefully. Determine from the exclusions if additional insurance is needed. If you have any business loans, review the terms of the loan. Many lenders require replacement cost in the lending agreement. Work with your agent to determine the proper coverage for your business.

Do I really need business insurance?

Friday, May 13th, 2011

Do I really need business insurance or can I get away without it?

Putting a business insurance package in place is a lot more than just a strategy to protect your company, and provide peace of mind. It will allow you and your business to remain viable and competitive in the event of an accident or disaster.

Many business owners opt for the cheapest premium and minimum coverage while exposing themselves to some pretty high risks. Others still, over pay and over insure their business and business owners don’t want that either. Avoiding these extremes is simple if you bring in a licensed insurance professional to review and advise you on your business insurance needs.

Paying business insurance premiums seems like a burden with no real return. The real question here is whether you can afford not to have the protection in place. No one has a crystal ball where they can predict the next natural disaster or accident by you or one of your employees. Preparation is far better than facing financial ruin form one event such as a hurricane or fire.

The overwhelming monetary expense of fighting a lawsuit from an accident or claim against your product or service as well as the mental anguish and stress produced. Would your business be able to survive an event like Hurricane Katrina or the aftermath? The serious and deadly Ice Storm of 1998 that wreaked havoc on northern states for up to 10 days, where many buildings were without power and had water mains and pipes burst.

Could your business move and reopen at a different location in a reasonable time? Is my liability coverage sufficient to cover a significant claim and allow you to maintain focus on your business?

Work with your licensed insurance professional to find the proper coverage for your situation. Then, at least annually, review the coverage in place and provide your agent with what is new and happening with your business. Make sure to advise them of any expansion plans or new product or service offerings. Give them the information needed to protect your business as you grow it.

Commercial Auto Insurance

Thursday, May 12th, 2011

Commercial Auto Insurance, why?

For most businesses, an auto is right up there on cost for assets a business may own. If your business owns or is on the title of an auto, chances are very high you need commercial auto insurance.

Like any business coverage, this policy will take into consideration who is operating the auto. A sole proprietor is apt to be insuring fewer drivers; therefore it’s likely the premium would be far less than another small business that has multiple drivers.

The number and types of autos as well as purpose and miles driven will all come into play. Remember, it is imperative to work with your licensed insurance professional in determining the proper coverage limits. In addition, it’s possible that certain other types of insurance or coverage may be warranted to protect the business.

Auto liability limits may need to be increased as well as adding cargo or transport coverage. Will you be transporting clients on a regular basis? Are your autos equipped with refrigeration units? Carrying tools or other expensive equipment which could be damaged or stolen? Is the vehicle expected to be driven long distances on a regular basis? Do you need hired and non-owned owned coverage for rented autos or employee autos being used on a regular basis for business?

Push your licensed agent to explain coverage and more important, exclusions in the commercial policy. Make sure third party injury and medical payments exceed the standard claims for your area.

Once a policy is presented, take some time to read and understand it. Shop it if you feel you should, just make sure to give the licensed agent your working with a last look opportunity if cheaper coverage is found. Determine whether action needs to be taken if employee’s driving records are forcing your premiums to go higher. Work with your licensed insurance professional through the process in determining the appropriate coverage needed to best protect your business, your employees, and the assets of your business.

Commercial Umbrella Insurance

Wednesday, May 11th, 2011

Commercial umbrella insurance, is it right for your business?

A commercial umbrella policy, sometimes known as excess liability insurance, can supplement other policies in force.

Most liability policies have a limit to which they will pay out. For instance, your general liability insurance policy may have a million dollar limit. In the event of an award of 1.25 million dollars, your general liability policy will pay out the million dollars, and then your commercial umbrella policy — which in this case is an additional million dollars — will pay out the $250, 000 shortfall less the self insured retention (deductible).

Therefore, you protect your business assets from lien or liquidation. It is important to remember, a commercial umbrella is used to add protection for general liability, employer liability, and commercial auto insurance.

A commercial umbrella policy can increase the potential coverage of several policies for a substantial dollar amount for a reasonable cost versus increasing the individual policies coverage to the same threshold. This can help a business owner control costs while maximizing protection.

It is important to determine the risk exposure and additional coverage needed if necessary. Work with your licensed insurance professional for help and guidance in determining whether a commercial umbrella may be a good option.

Take the time to determine what types of claims are made in your industry and what awards are generally given in a lawsuit. If you belong to an industry association, check with them as well.

In many cases, the initial protection will cover most scenarios. However, your research may indicate a commercial umbrella policy will manage the higher end damage awards and protect the assets and financial solvency of the business in the event of large claim and award.

Reducing Workers Compensation Premiums

Wednesday, May 11th, 2011

Can I reduce my workers compensation premiums?

On the whole, workplace safety has come to the forefront and workers compensation claims continue to decline. Understand of course, certain industries still continue to have up ticks in claims and costs.

Implement a risk management plan in your business if you have to pay workers compensation insurance premiums. In the beginning, utilize the risk management staff at your carrier, the company that writes the workers compensation. As you grow and get larger, it may make sense to assign this to staff and eventually, even hire someone to perform this function. Implement safety procedures which make you a better risk for the carrier. In addition, take a look at the following to see if it may help you reduce your premiums:

Start a program to allow workers to get back into the work place faster. Establish a step program which would allow for limited capacity which would gradually increase. Remember that rising rates are a result of benefits paid. The earlier an employee can get back to work, the better for everyone.

Check on how your payroll is reported. Overtime and bonuses may not have to be factored into payroll costs which help determine your premium.

Has your company had claims, is it a particular department or group? Investigate and address these as part of your risk management program and make sure to advise your carrier.

Check your job classification codes, sometimes they may be classified wrong and raise rates.

Keep your carrier informed of changes and improvements made to the workplace.

Don’t be afraid to review your workers compensation annually with all your other business insurance. Work with your licensed insurance professional and carrier to make sure your coverage, risk exposure, and premium is where they need to be.