Most small businesses need to purchase at least the following four types of insurance.

Property Insurance

Property insurance compensates a business if the property used in the business is lost or damaged due to such things as fire or theft. In addition to the building or structure, property insurance covers personal property such as office furnishings, inventory, raw materials, machinery, computers and other items necessary to a business’s operations. Depending on the policy, property insurance may include coverage for equipment breakdown, removal of debris after a fire or other destructive event, some types of water damage and other losses. It may also provide operating funds when the business is trying to get back on track after a catastrophic loss.

Liability Insurance

Any business can be sued. Customers may claim the business caused them harm due to a defective part, an error in a service, or disregard for another person’s property. If the business is found liable, liability insurance pays damages, up to the policy limits, as well as attorneys’ fees and other legal defense expenses. It also pays the medical bills of anyone injured by or on the premises of the business.

Business Auto Insurance

A business vehicle policy covers cars owned by a business. The insurance pays any costs to third parties for bodily injury or property damage for which the business is legally liable, up to the policy limits.

Workers Compensation Insurance

In all states, except Texas, an employer must have workers' compensation insurance when there are more than a certain number of employees. The minimum number varies from three to five, depending on the state. Workers' comp insurance, as this coverage is usually called, pays for medical care and replaces a portion of lost wages if an employee is injured in the course of employment, regardless of who was at fault for the injury.

If a worker dies because of injuries sustained while working, the insurance provides compensation to the employee’s family. An extremely small business, with one or two people working out of a home, may not need workers' compensation insurance. However, these small businesses may need more property and liability insurance than what is offered by a typical homeowners policy.

Other Types of Business Coverages

Errors and Omissions Insurance/Professional Liability

Some businesses involve services such as consulting, design functions, or representing the needs of others, which can lead to being sued by customers or clients, claiming that the business’s failure to perform a job properly has injured them or caused some sort of harm. Errors and omissions or professional liability insurance covers these situations. The policy pays the judgment for which the insured is legally liable, up to the policy limit. It also provides legal defense costs, even when there has been no wrongdoing.

Employment Practices Liability Insurance

Employment practices liability insurance covers (up to the policy limits) damages for which an employer is legally liable, such as violating an employee’s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides legal defense costs, which can be substantial even when there has been no wrongdoing.

Key Employee Insurance

When certain key employees die or become disabled, income insurance can compensate the business. This coverage cushions some of the adverse financial consequences that result from losing a key employee.

Umbrella Policies

As the name implies, an umbrella liability policy provides coverage beyond the business’s other liability insurance policies. It is designed to protect against unusually high losses and provides protection when the policy limits of one of the underlying policies have been used to the limit. For a typical business, the umbrella policy protects beyond the general liability and auto liability policies. Additionally, if a company has employment practices liability insurance or other types of liability insurance, the umbrella could provide protection beyond the limits of these policies.

As a business owner, it is in your best interest to offer your employees a comprehensive benefits package, but how do you know what works and what doesn’t? Health insurance is a good place to start, but there are so many options to choose from.

Offering the "right" health insurance plan is one of the most important decisions you can make as a business owner. Keeping employees happy and healthy will benefit you in the long run. But making sense of the complex health care system has become increasingly difficult for employers. We are here to help you understand and then untangle your group health insurance options.

What is Group Insurance?

Simply put, group health insurance is a health insurance plan you extend to your business’s staff and, perhaps, their dependents. With a group health insurance program, you pay either part or all of the cost of the monthly premiums for your employees, from which you typically gain certain tax benefits.

There is no right or wrong answer when it comes to health insurance planning for your business because there are many variables to consider. We can help you determine the plan that is right for you and then develop a strategy that is best for both your company and your employees.

Each client is unique, with its own set of needs and requirements. As a result, we do not provide cookie-cutter solutions. We treat every client differently with the understanding that every employer has different needs!

Instead of anticipating your needs, we listen and learn what you value and dislike in your current group health and employee benefits. From there, we ask questions and develop a strategy to help you meet your goals. We then set up regular meetings to review the strategies we've implemented together and ensure you are moving closer to your goals.

Many employers use their employee benefits packages to attract and retain valuable employees to keep their business thriving. At the very least, employee benefits can consist of health, dental, disability, and life insurance.

We can assist you in developing a combination of carriers and products that meet your needs and expectations. We will work with you to develop strategies to ensure you are in line with your competition.

We would like the opportunity to earn your business. To schedule an appointment, please fill out the Contact Us form. We will then reach out to you to schedule an appointment.

Key person insurance is a critical component of any organization because it can help the company survive the loss of an integral member.

Replacing a key person takes time and money, and could cost your business valuable clients during the transition. Key person life insurance offers a death benefit that can help cover financial losses that occur at the death of a key person. This helps assure continuity of the business for employees, customers, and creditors.

Taking out a key person policy on your top employees also affirms their value to your business, strengthening the relationship.

Other features of key person insurance

• The death benefit can be used to recruit and develop a replacement for the previous key employee

• Coverage is a business asset that enhances your company’s creditworthiness for commercial borrowing

• The policy’s cash value may be available to your business through a withdrawal or loan if needed

• The business pays the premiums, and they are non-deductible

How much life insurance is needed on a key employee?

This is a difficult question, and budget will, no doubt, be a factor. Most life insurance companies will approve up to 5-10 times the key employee’s annual salary including bonuses. Age will also be factored into the multiple of income allowed. The insurance carrier will want to know the nature of the business, when the company was started, the net worth of the company, whether the key person is an owner of the business, and whether all key people will be insured. Insurance carriers will want to see that all key people, or owners of the company, will be insured. It’s a red flag if any key persons or owners aren’t insured, unless they are uninsurable.

Workers' compensation is a must-have insurance for companies with employees in order to provide benefits to employees who are injured or become ill on the job.

Through this program, workers receive benefits and medical care, and employers can know that they did what they could to avoid being sued by the employee.

Workers' compensation is administered at the state level through the U.S. Department of Labor's Office of Workers' Compensation Programs. Every state requires employers to purchase workers' compensation insurance to help ensure that employees, affected by illness or injury, and their dependents, are protected against significant hardships in case of injury, illness, or death.

For the record

As an employer, ensure that your employees and management staff know that accident reports must be completed when an employee is injured or claims job-related illness. It is important to provide the claims filing forms from your chosen workers' compensation company. Also, work closely with your workers' compensation agent to help ensure that both the employee's medical needs and your liability are covered.

Follow the guidelines we provided and make sure the claims are completed thoroughly and in a timely manner. Remember, you can also contact your state workers' compensation office for help.

How quickly your business can return to full operations after a major disaster such as a tornado, a fire, or a flood often depends on the emergency planning you do today!

When you also consider that the number of declared major disasters more than doubled compared to the previous decade, preparedness becomes an even more critical issue. Although each situation is unique, any organization can be better prepared if it:

• plans carefully,

• puts emergency procedures in place, and

• practices for emergencies of all kinds.

America's businesses form the backbone of the nation's economy; small businesses alone account for more than 99% of all companies with employees, employ 50% of all private sector workers, and provide nearly 45% of the nation's payroll. Planning today will help support employees, customers, the community, the local economy, and even the country. It also protects your business investment and gives your company a better chance for survival.

Ready Business outlines commonsense measures business owners and managers can take to start getting ready. The site is an excellent resource with easy-to-use templates to help you plan for your company's future. These recommendations reflect the Emergency Preparedness and Business Continuity Standard (NFPA 1600) developed by the National Fire Protection Association and endorsed by the American National Standards Institute and the Department of Homeland Security.

Business continuity and crisis management can be complex depending on your industry, size, and scope. However, putting a disaster protection and continuity plan in motion helps improve the likelihood that your company will survive and recover.

The following information is a good start for small- to mid-sized businesses. The following helps give you an idea of what it may cost to develop a disaster protection and business continuity plan. Some of what is recommended can be done at little or no cost. Use this list to get started and then consider what else you can do to help protect your people and prepare your business.

No Cost

• Meet with your insurance provider to review current coverage.

• Create procedures to quickly evacuate. Practice the plans.

• Talk to your people about the company's disaster plans. Two-way communication is central before, during, and after a disaster.

• Create an emergency contact list including employee emergency contact information.

• Create a list of critical business contractors and others whom you will use in an emergency.

• Know what kinds of emergencies might affect your company both internally and externally.

• Decide in advance what you will do if your building is unusable.

• Create a list of inventory and equipment, including computer hardware, software and peripherals, for insurance purposes.

• Talk to utility service providers about potential alternatives and identify back-up options.

• Promote family and individual preparedness among your co-workers. Include emergency preparedness information during staff meetings, in newsletters, on the company intranet, periodic employee emails and other internal communications tools.

Under $500

• Buy a fire extinguisher and install a smoke alarm.

• Decide which emergency supplies the company can feasibly provide, if any, and talk to your co-workers about what supplies individuals might want to consider keeping in a personal and portable supply kit.

• Set up a telephone call tree, password-protected page on the company website, email alert, or call-in voice recording to communicate with employees in an emergency.

• Provide first aid and CPR training to key co-workers.

• Use and keep up-to-date computer anti-virus software and firewalls.

• Attach equipment and cabinets to walls or other stable equipment. Place heavy or breakable objects on low shelves.

• Elevate valuable inventory and electric machinery off the floor in case of flooding.

• If applicable, make sure your building's HVAC system is working properly and well-maintained.

• Back up your records and critical data. Keep a copy offsite.

More than $500

• Consider additional insurance such as business interruption, flood or earthquake insurance.

• Purchase, install and pre-wire a generator to the building's essential electrical circuits. Provide for other utility alternatives and back-up options.

• Install automatic sprinkler systems, fire hoses and fire-resistant doors and walls.

• Make sure your building meets standards and codes. Consider a professional engineer to evaluate the wind, fire, or seismic resistance of your building.

• Consider consulting with a security professional to evaluate and/or create your disaster preparedness and business continuity plan.

• Upgrade your building's HVAC system to secure outdoor air intakes and increase air filter efficiency.

• Send safety and key emergency response employees to trainings or conferences.

• Provide a large group of employees with first aid and CPR training.

  1. Source: U.S. Census Bureau, SUSB, CPS; International Trade Administration; Bureau of Labor Statistics, BED; Advocacy-funded research, Small Business GDP: Update 2002-2010, www.sba.gov/advocacy/7540/42371

Errors and Omissions (E&O) is insurance to protect you and your company if a client claims they suffered a financial loss because of an error or an omission committed by you in the delivery of your professional services. This could result in a lawsuit.

What is E&O?

E&O is a limited insurance category designed to protect you against professional error. Professional error is a risk in any business environment. For example:

• Shipping a valuable piece of art to the wrong location

• Selling software that might cause a customer's computer systems to shut down

• Hiring a subcontractor who doesn’t fulfill his obligations to the job, impacting the project’s deadline

The number of possible professional errors runs a wide range, and many may not be serious. However, some will certainly cause a customer to sue you.

The benefit of E&O is that it protects you across a range of legitimate professional errors and against frivolous lawsuits by paying for legal costs.

Who Needs E&O?

While errors and omissions insurance has been part of the insurance portfolio of doctors, lawyers, financial services professionals, and realtors, many businesses face professional liability risk. To help determine whether you need E&O, ask yourself, "Can I afford a lawsuit due to a professional error on my part?" For the majority of small businesses, the answer is probably no. It doesn’t matter if you win or lose the lawsuit, because there's the question of paying the lawyers.

Often businesses will require their vendors and subcontractors to hold E&O insurance. Even if it isn’t required, showing prospective customers that you are protected may give them the peace of mind they need to hire you. If you consider the alternative, you'll see that the annual premium, which varies based on the number of your insured employees and the nature of your business, could be a  cost-effective way to obtain needed protection.

Footnote: This is a brief overview of Errors & Omissions Insurance. You should read a policy thoroughly before purchasing any insurance policy.

Umbrella liability insurance is an extra insurance policy that covers some expenses not covered by other liability insurance policies. 

Standard business liability coverage will protect you in many situations, but when serious situations arise, umbrella liability insurance can help ensure that your business is protected. Accidents are unexpected and often unavoidable. Here are a few of the many situations that may happen:

• Your business fails to provide the appropriate professional services

• Your company holiday party gets out of hand, resulting in property damage

• Your building has a fire that results in multiple injuries and/or deaths

Cover your business with umbrella liability insurance

A business umbrella policy picks up where your business auto liability, general liability, or other liability coverage exceeds its limits. Umbrella insurance is a cost-effective way to provide extra coverage against bodily injury and/or property damage.

For example, if your current policy protects your business for up to $2 million and you are successfully sued for $3 million, your business umbrella coverage can pay the outstanding $1 million. Otherwise, the difference would very likely come out of your business profits or your pocket.

It’s there when you need it

The umbrella policy only comes into play when your basic insurance policies have met maximum payouts. That means that you may go for years without having to use the umbrella policy. But it's there in case you need it, helping to mitigate risk.

Taking the initiative to carry an umbrella insurance policy is a smart way to provide extra protection for yourself and your business.

Footnote: This is a brief overview of Commercial Umbrella Insurance. You should read a policy thoroughly before purchasing any insurance policy.

Do I need liability insurance for my business?

A good liability risk policy can help mitigate the chance that your business will be sued. As careful as we may try to be, mistakes happen that might result in an injury to someone or damages to property. A mistake could also harm the reputation or interfere with the privacy of a customer or client. As a result, you may be legally liable to pay damages to someone who suffers a loss due to your actions or inaction.

Depending on the degree of harm and the number of people injured and/or the value of property damaged, a lawsuit could bankrupt your business. Even if your organization is cleared of any wrongdoing, a determined plaintiff can keep you tied up in legal proceedings for years, resulting in an expensive and time-consuming defense. Liability insurance pays the cost of your defense, protects your assets, and lets you stay focused on your business.

What policy is right for me?

For small businesses, the most efficient and least expensive way to purchase liability insurance is usually as part of the Business Owners Policy (BOP), which combines property and liability insurance in one contract.

Under a BOP, your insurance pays damages that you are legally obligated to pay as a result of “bodily injury,” “property damage” or “personal and advertising injury,” up to the policy limits and subject to your deductible. Punitive damages are generally not covered, although there may be some exceptions.

Bodily injury means injury, sickness, disease or death; it may include injuries that are emotional or mental, such as post-traumatic stress syndrome or humiliation. Personal and advertising injury includes:

• libel, slander or any defamatory or disparaging material or a publication or utterance in violation of an individual's right of privacy;

• infringing the privacy or copyright rights of another in your advertisement;

• wrongful entry or eviction, or other invasion of the right of private occupancy; and

• false arrest or wrongful detention.

What is covered medical expense?

For the most part, your BOP liability coverage is for situations where a third party claims you were negligent and sues for damages. The medical payments coverage is an exception, as it pays medical expenses for bodily injury to third parties that occurs on premises you own or rent or as a result of your operations regardless of fault.

Who is insured?

BOP liability coverage insures a sole proprietor, partners or partners named in the policy "Declarations," but only with respect to their duties on behalf of the business. The spouses of sole proprietors or partners are also covered. If your organization has officers and directors, they are insured, as are your stockholders, but only with respect to their duties or liabilities in connection with the business. Employees and volunteer workers are insured for acts committed within the scope of their employment in your business.

How much liability coverage is right for my business?

The amount of liability coverage a business needs depends on the perceived risk. For example, a business that manufactures or distributes engines and generators is at a greater risk of being sued than one that distributes fabric and would therefore need more liability insurance. You can usually get a good sense of lawsuits involving your type of business through your trade association.

Some of the companies with which you do business may require you to carry a specific minimum amount of liability insurance. Make sure to keep an eye on contracts with your suppliers and customers in case they have specific requirements for liability coverage.

What is the difference between occurrence and claims made policies?

There are two major forms of liability insurance policies: Occurrence and Claims Made.  

Occurrence Policy: An occurrence policy covers a business for harm to others caused by incidents that occurred while a policy is in force, no matter when the claim is filed. For example, a person might sue a business in 2010 for an injury stemming from an injury in 2001. The policy in place when the incident occurred (i.e., 2001) will apply, even if the company now has a policy with higher limits.

Claims Made Policy: A claims made policy covers the business based on the policy that is in force when the claim is made, regardless of when the incident occurred. In the above example, the limits in the policy in effect in 2010 would apply.

As a partner or co-owner (private shareholder) of a business, you've spent years building a valuable financial interest in your company. If you thought about setting up a buy-sell agreement to ensure your surviving family a smooth sale of your business interest, then consider life insurance.

How to set up different types of buy-sell agreements

In an entity-purchased buy-sell agreement, the business itself buys separate life insurance policies on the lives of each of the co-owners. The business usually pays the annual premiums and is the owner and beneficiary of the policies.

In a cross-purchase buy-sell agreement, each co-owner buys a life insurance policy on each of the other co-owners. Each co-owner usually pays the annual premiums on the policies they own and is the beneficiary of those policies. If your company has a large number of co-owners, each co-owner must purchase multiple policies.

A wait-and-see (or hybrid) buy-sell agreement allows you to combine features from both the entity purchase and cross-purchase models. The business can buy policies on each co-owner, the individual co-owners can buy policies on each other, or a mixture of both methods can be used.

The buy-sell agreement should be fully funded

The amount of insurance coverage on your life should equal the value of your ownership interest. Then, when you die, there will be enough cash from the policy proceeds to pay your family or estate in full for your share of the business. But, if all that is affordable is insurance coverage for a portion of your interest, you might want to go ahead and fund that amount. Later, the company may be able to increase the amount of insurance or use additional funding methods. In the meantime, the agreement should specify how your family or estate will be paid.

The value of the business could change

What if the insurance proceeds turn out to be less than the value of your business interest, due to growth in the business? Your surviving family members might end up getting less than full value for your business interest. Your buy-sell agreement should specify how the valuation difference will be handled.

Conversely, the insurance proceeds might be greater than the value of your business interest when you die. Your buy-sell agreement should address this potential situation upfront and specify whether the excess funds will belong to the business, the surviving co-owners, or your family or estate.

Keeping track of your buy-sell agreement

Each year, the premiums on the policies must be paid, or the insurance will lapse. So monitor premium payments carefully. Your buy-sell agreement should include a feature requiring ongoing proof of payment. Also, review the amount of insurance regularly. The insurance coverage may have to be increased periodically to reflect increases in the value of the business. If additional insurance is not possible, another funding method should be established.

Anyone who comes in contact with you or your employees in the course of your business can file a claim or lawsuit against you for any number of reasons, from a customer injury to a broken contract.

What if something happens?

Business liability insurance can provide coverage to help businesses mitigate potentially devastating lawsuits, with coverage options including:

Premises and operations

A customer trips on a fixture at your business and is injured. Business liability can help cover the resulting hospital bills and damages, as well as your business if the customer sues for negligence.

Products and completed operations

A project your company builds or undertakes is flawed, a lawsuit is filed, and the former client wins. Business liability insurance can include coverage to help with the defense costs and, in some cases, the legal damages for which the policyholder may be responsible.

Cyber liability and data breach

Your computer system is hacked, and you risk losing confidential business and customer data to online theft. Cyber liability insurance coverage can help provide you with legal and forensic assistance to attempt to recover stolen data, as well as ongoing data security consultation to help you manage cyber risks.

Employment practices liability

If you've been in business for a few years or operate in an industry with high turnover rates, you've likely hired many employees, whether temporary or full-time. The truth is that any of these employees, or even applicants that you did not hire, can bring legal action against your business at any time. Business liability insurance can help cover your business entity, directors, officers, and employees if you are accused of wrongful termination, harassment, discrimination, and other employment-related offenses.

Call us and let’s make sure you have sufficient coverage!