Let’s talk insurance.
I know that’s a little like saying, “Gee, wouldn’t a root canal be fun?” But it’s a very necessary conversation in the life of any small business.
Not every business is the same and not every business needs the same type of insurance coverage.
Step One needs to be a straightforward assessment of what your business actually needs. Here are a few things to think about:
Some Types of Insurance Are Required By Law
There are basically three types of insurance coverage that your business is required to have if you have employees: Unemployment insurance, Social Security and Workers Compensation.
Unemployment insurance benefits are paid under the laws of each individual state from the Federal-State Unemployment Compensation Program. Your payments as the employer, based on your total payroll, are contributed to the program. Your unemployment insurance should be included in your taxes.
The Social Security program is funded by payments from employers, employees and the self-employed. Payments go into an insurance fund that provides income after retirement or disability, or payments to dependents upon the death of the employee.
Workers’s Compensation Insurance protects your employees if they have a work related or on-the-job injury. It pays the injured employee’s medical bills. Each state controls coverage and provides benefits. Coverage is usually provided by private insurance or an employer self-insurance arrangement. The requirements in each state are different, so make sure you comply with what your state requires.
Optional Insurance To Consider
There are other types of insurance coverage that, while not required by law, are required by common sense. Take a serious look at what your business liabilities and assets are and decide if you need any of the following:
Property insurance covers the building where your business is located as well as the contents of your business. In deciding how much coverage you need, think about this:
1. What do you want covered? The more you have covered, the more expensive the policy.
2. What risks do you need to be insured against? Flood, fire and theft are the most obvious. With all the natural disasters we have seen in the news lately, flood insurance should be a serious consideration. Find out if you’re in a flood plain and make sure you’re covered if you need to be.
3. How much insurance coverage do you need? We’re talking dollars and cents here. Remember, the greater the amount of coverage, the higher the premium. Be realistic in assessing what you need and how much you can spend.
This is a really hot topic right now with the changes coming into play with the newly passed health care legislation. There are many federal requirements that you need to meet and there are tax incentives available for small businesses that provide health care coverage. Talk to us about what you do and do not have to provide. Non-compliance with providing the required coverage can be costly.
This insurance provides income for employees who cannot work because of an accident or illness. There are long-term or short-term policies. Not to be confused with Worker’s Compensation Insurance, these policies pay the employee for non-work related illnesses or injuries.
Short-Term Disability usually means the employee cannot perform the duties of his or her normal job. Benefits are usually limited to a specific time period and the amount of compensation is based on the employee’s salary.
Long-Term Disability benefits usually begin after short-term benefits expire. They continue for as long as the employee is disabled or until they reach normal retirement age.
These policies cover accidents for which your business is legally responsible. You can be held liable for the actions of your employees if the accident happens in the normal course of their jobs. If any of these activities applies to your business, you might want to consider liability coverage:
- Requires interaction with the public
- Customers come onto your premises
- Requires your employees to drive a vehicle in the course of performing their job duties
- You sell a product to the public and could be held liable for injury caused by the product
Lots to think about, isn’t it?
A thorough risk assessment for your business, from the very beginning, is one of the most cost-effective steps you will ever take. Getting the right coverage and getting the coverage that you actually need is just good business.
And as with any other process with serious potential for legal issues down the line, always consult an attorney to determine what’s best for you. The time has never been better for small business owners to schedule a comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Action Session. Simply complete the form, and return it to info(at)hawkeslawgroup.com. Our Client Services Director will contact you within 24-48 hours to schedule your LIFT Foundation Action Session. Normally, this session is $1,250, but if you subscribe to our mailing list with your first name, email address, mailing address, and mobile number, we will waive that fee.