5 things to consider for small business insurance

No matter what business you operate, your company’s daily existence is faced with numerous risks and responsibilities.Small business insurance helps small businesses mitigate some of these risks and maintain Business growth When unforeseen events may put your company’s survival at risk. Here are five things to consider when buying insurance.

1. What type of small business insurance do I need?

The federal government requires every company with employees to have work injury insurance, unemployment insurance and disability insurance. Unemployment Insurance (UI) is a federally directed program that is managed and operated by the state government. Each state determines its own UI rate, and employers must pay a certain percentage of employee salaries to the state’s UI fund. Many states also have a disability insurance fund to which employers should contribute.

After meeting these three main commercial insurance requirements, the type of insurance you need depends on your industry, the type of work you are doing, your physical location, property and equipment, employees and customers, and intellectual property.

Cost depends on many factors, including the type of business you have. Likewise, the cost of insurance premiums depends on the same factors. Most small business insurance policies fall into the following categories:

• General liability insurance. Covers economic losses caused by property damage, personal injury, medical expenses, court costs related to defense litigation, defamation, defamation, and judgments.
• Product Liability Insurance. It is important for manufacturers, wholesalers, retailers and distributors of products that may cause damage due to product defects.
• Professional liability insurance. Also known as “errors and omissions” insurance, this policy covers economic losses caused by misconduct, errors and negligence.
• Commercial Property Insurance. This is important if property and tangible assets are damaged due to various events (from fire to vandalism).
• Business Owner Policy (BOP). As a small business owner, you can bundle general liability insurance with commercial property insurance. BOP can save your business the cost of having to pay for two different policies.

Other important policies to consider include:

• Family-based commercial insurance. Usually, it can be added to the homeowner’s insurance policy to cover commercial equipment and third party injury liability.
• Key Person Insurance. It is especially important for very small companies, because everyone’s work is vital to the company’s survival. It covers the cost of starting or closing the business in the event of the death of a key person (employee or owner).

Please consult your broker or trade industry to find out the insurance policy recommended for your specific type of business. Policies such as providing alcohol liability insurance for alcohol service companies and providing pesticide insurance for gardeners are essential to protect companies from destructive litigation.

2. Cyber ​​Liability Insurance

Even if you take appropriate security precautions to ensure that your company’s data is protected, you still have no sense of security. Very good, this is how you should feel.In 2020 alone, more than 155.8 million Americans will be Data exposureMost violations are caused by human error, but nevertheless, investing in cyber liability insurance is a good idea.

What is cyber liability insurance? Cyber ​​liability insurance covers the costs when your company needs to recover from a data breach, virus or cyber attack. The policy also covers expenses related to legal claims due to violations. If your business collects and stores sensitive data on the cloud or on electronic devices, you should seriously consider purchasing cyber liability insurance. Moreover, if your business operations are interrupted due to a data security breach, cyber liability insurance is critical to your recovery.

3. The importance of business interruption insurance

Most businesses have plans for disasters such as fires and power outages or (depending on where you live) natural disasters such as tornadoes, hurricanes or earthquakes. Nevertheless, it is certain that few business owners are prepared for a global pandemic. Unfortunately, no matter what kind of disaster it is, their impact on small businesses is usually greater than that of large businesses that usually have the financial resources to recover.

In fact, according to Federal Emergency Management Agency, 40% to 60% of small businesses affected by the disaster have never reopened. Although business interruption insurance can prevent some of them from closing, few small businesses carry it. According to the Insurance Information Institute, business interruption insurance (or business income insurance) covers business operating costs due to temporary closures. Of course, the reason for the temporary closure must be listed in the insurance policy, but for most disasters, compensation may be a lifeline for survival.

Business interruption policies are usually used by small and medium enterprises and include property, liability and business income insurance. Covered disasters may include damage caused by fire, wind, falling objects, lightning, and even civil strife. Don’t assume anything when looking for policies. Natural disasters or rare things like infectious diseases worldwide may not be covered without additional fees.

The cost of business interruption insurance varies by industry, property value, and company income—obviously, the more you lose, the higher the cost. But when the universe throws a curveball at you, it may be worthwhile to understand the safety of your business.

4. Employer’s Insurance Notice

If you have employees, you need to understand whether and how the Affordable Care Act authorization affects your small business insurance obligations. Generally speaking, the Affordable Care Act (ACA) applies to employers with 50 or more full-time employees.Employers in this category must provide “affordable” health insurance, which means that employees’ expenditures should not exceed 9.83% of household income Regarding coverage.

Even if your business has fewer than 50 employees, providing employees with health insurance will make your company more attractive to potential talent. For existing employees, medical benefits can help retain talent, reduce absenteeism, increase employee satisfaction, and benefit your business through tax incentives.

Worried about not being able to afford medical insurance? Legally speaking, as long as your insurance policy is not discriminatory, you can choose to only provide health insurance to certain employees. For example, you can only provide health insurance to full-time employees. Generally, the small business health insurance option is one of the following:

• Personal Insurance HRA (ICHRA): ICHRA is an account-based health plan that allows employers to provide employees with tax-free reimbursement of eligible medical expenses, including monthly premiums, co-payments and deductibles. Employees must participate in their own health insurance before they can be reimbursed. ICHRA is open to businesses of any size; however, only employees are eligible, and self-employed persons are not.
• Qualified Small Employer HRA (QSEHRA): QSEHRA is similar to ICHRA. However, QSEHRA is only applicable to employers with fewer than 50 employees, and the annual reimbursement limit is capped. Employees must enroll in their own insurance, or they can enroll in a spouse’s insurance plan and still receive tax-free reimbursement.
• Group coverage of HRA: HRA is an employer-funded medical reimbursement plan. The employer provides funds to HRA to offset the high deductible health plan provided by the company. The company provides employees with monthly tax-free allowances (except for group policies) to cover the medical expenses of the employees’ out-of-pocket expenses.
• Traditional group health insurance plan: Here, small businesses pay their employees’ premiums or transfer part of their premiums to employees. The employee is then responsible for the co-payment and deductible.
• Self-financed medical insurance: Small businesses do not pay specific insurance companies, but pay each employee’s out-of-pocket expenses when they occur, and the company signs a contract with a third-party administrator to establish a trust account funded by the company and employees.

5. Careful review

Finally, your business is different from a year ago, so your business insurance policy shouldn’t stay the same either.Like forgotten business plan Many small business owners are stuffed into a document, forgetting to review their policies, until it is too late to discover that they are missing an important aspect. You should immediately check what you need to add and the insurance policy you paid for the insurance you no longer need. Are employees working remotely and therefore do not need internal protection? Have you bought a new device and forgot to cover it? Have you expanded or reduced the types of products or services you sell? All of these factors can affect the amount and type of small business insurance you need. Stay vigilant and master the details of your small business insurance policy, so you can rest easy and save your business.