Read about small business insurance through articles that our experts have penned.
Handle Workers’ Compensation Claims the Right Way
Workers’ Compensation claims can be a source of stress and confusion for small-business owners. Many mishandle Workers’ Comp cases because they lack a complete understanding of the claims process, which leads to neglecting to communicate clearly with employees along the way.
You can save your business time, money, and resources by handling Workers’ Comp claims properly from the beginning and communicating often with all parties involved.
Many Workers’ Comp Issues Stem from Poor Communication
According to a recent article posted on WorkersCompensation.com, many of the common issues and misunderstandings associated with Workers’ Comp can be traced back to employer silence. The author, practicing attorney Theodore Ronca, discusses the following three major problem points that commonly affect small business owners:
- • Forty-six percent of employees incorrectly assume that their employer is contesting their claims. A recent survey found that 46 percent of workers who filed claims hired lawyers because they assumed their claims were being contested, even though that was not the case. In reality, paperwork can take days, weeks, and even months to go through; such is the nature of administrative agencies in the claims business. If the employers of those workers had just kept them updated along the way, much misunderstanding could have been avoided.
- • You, the business owner, (and not a lawyer) should be communicating with your worker. Handling claims properly means being in the know. Your employee should be working with you, not a lawyer. You should be able to answer their most pressing questions regarding how to proceed, what they can expect, and how their case will proceed. If you’re not sure of the answers, let your employee know you’re researching and will get back to them.
- • Many business owners don’t understand what’s required of them in the Workers’ Comp claims process. Not knowing what to do doesn’t give you an excuse to stay mum. Communicate with your employee throughout the claims process, and you’ll have the opportunity to offer solutions to any problems that arise.
Steps to Make Your Next Workers’ Comp Claim Go Smoothly
- 1. Talk with your employee. You will have a positive impact by simply establishing open lines of communication early on. If, like many small-business owners, you don’t have an HR team, you’ll be the communication point person. Make sure your employee knows that and that you’re available to answer any questions that arise.
- 2. Talk with your attorney. If you are unsure about how to approach an employee filing a claim, speak with your attorney as soon as possible. He or she should be able to answer all of your questions and give you an idea of what challenges may arise during the claims process. Then, you can speak with your employee feeling prepared, confident, and informed.
- 3. Talk with your insurance company. Your insurance company should be available to answer your questions about the specifics of your coverage along with what paperwork is required of you. It should also be able to help you navigate the state laws regarding Workers’ Comp that apply to you and your business.
Know the Jargon: 10 Key Business Insurance Terms
Operating a small business without sufficient insurance coverage can leave you vulnerable to unnecessary loss. Lawsuits, accidents, and natural disasters are only a few of the risks that you can (and should!) guard yourself and your company against.
When shopping for insurance, though, you probably don’t have time to sift through all the jargon insurance companies use, especially if you need coverage immediately. Use this page as you read through quotes or policies to make sure you’re clear on what your provider is offering.
An additional insured is another person who is added to a current insurance policy. One example parents might be familiar with is adding a teenage driver to an auto insurance policy.
Certificate of Liability Insurance
A Certificate of Liability Insurance is the official document that states the dates that your insurance policy is active. It can be used to prove you have insurance coverage if a client requires proof of such coverage. Insureon’s online application process makes it possible to receive a Certificate of Liability Insurance within hours of submitting your application.
Anyone who makes a claim on your insurance policy. This insurance industry term may refer to you or a third party when requesting payment from an insurance company. The type of claimant varies depending on how broad your insurance coverage is.
A deductible is the amount you (or your business) must pay for damage before coverage takes effect and you receive payments from the insurance company. Often, premiums and deductibles have an inverse relationship: policies with lower premiums tend to have higher deductibles (e.g., you pay less each month for coverage but you have to pay more out of pocket before coverage kicks in if you make a claim), and policies with higher premiums tend to have lower deductibles. Some insurance policies may not have any deductible, paying benefits without requiring you to pay a single dime.
One of the most commonly misinterpreted terms in the insurance industry is exposure. Exposure is usually a dollar amount that measures your vulnerability to losses. A good example would be a business located along the coast that has a high natural disaster exposure. Every so often, insurance policies may use wording that explains exposure in units instead of dollars.
General Liability Insurance
This kind of insurance is very common in the insurance industry. General Liability policies may cover accidents that occur on the premises of your business or as a result of your products (or services).
The actual contract of insurance coverage. These written contracts contain all of the different sections and related attachments. Remember that the wording of your insurance policy is extremely important because it explains all of the nuts and bolts of your insurance contract.
The price of insurance coverage, often paid on a monthly or yearly basis. Premiums vary based upon how much risk you have and how long your coverage will last.
Quotes are estimates of a premium. Insurance companies take a lot of factors into account before issuing a quote to you. These may be the nature of your business, how many employees you have, and other factors that may affect your business, such as the risk of flooding or the types of equipment you use. Quotes allow you to comparison shop for the best bargain.
The reaffirmation of insurance coverage beyond a policy’s initial end date. Some policies have automatic renewals, but others require you to re-apply for coverage, so always remember to double check renewal details.
Knowledge = Power!
Insurance industry jargon can be intimidating at first glance, but the most transparent and reliable insurance companies in the business can guide small business owners through the mumbo-jumbo. Insureon has the expertise to help you and your business cut through the confusion and make an informed decision that will protect your business from the risks it faces.
Business Interruption Insurance: How It Works
Events that cause a business to temporarily stop operating have increased in number as well as severity. In this decade alone, some of the most severe natural calamities in remembered history have hit various parts of the globe: the ash cloud caused by the eruption of Eyjafjallajkull in Iceland, the tsunami that devastated Fukushima, Japan, and Hurricane Sandy.
Such disasters may not affect a business directly, but if one of your suppliers or shipping routes is located in an affected area goes through these areas, your business will suffer some losses.
But weather is not the only source of disruption. The Business Continuity Institute regularly reports on the most common causes of business interruption aside from adverse weather and natural calamities.
From most to least frequent, these causes are…
- • Unplanned telecommunications or IT outage.
- • Transport network disruption.
- • Outsourcer failure.
- • Loss of skill or talent.
- • Product quality incident.
- • Insolvency.
- • Civil unrest.
- • Industrial dispute.
- • Fire.
- • Cyber attacks such DDOS attacks and malware.
Typical Business Interruption Insurance Coverage
Business Interruption Insurance (officially called Business Income and Extra Expense Insurance) is designed to cover the income you lose when you have to close your business temporarily because of events beyond your control. It is an extra layer of protection that goes beyond more common insurance policies like Property Insurance.
For example, if an establishment is burned down, Property Insurance can be used to cover the damages, but it won't cover the potential income lost. Business Interruption Insurance, on the other hand, will cover that income.
A typical Business Interruption policy will provide coverage for three things:
- 1. The profits you would have earned if the incident did not occur.
- 2. Normal operating expenses even though the business is temporarily closed. This includes your employees’ wages so you can keep them on staff rather than firing them and hiring untrained replacements when you’re ready to reopen.
- 3. The expense of moving your business to a temporary location. This might include both moving and rent costs.
The payout amounts you receive from your Business Interruption Insurance are based on historic records about your business' income and expenses – so store such records in a safe location, preferably off-site and / or digitally through the Internet.
Business insurance providers include clear clauses in the policy concerning what will trigger Business Interruption coverage. In general, coverage starts a few days after the incident and lasts until your affected business location becomes usable again.
Often, Business Interruption Insurance is included as part of a Business Owner’s Policy (BOP), which is a package for low-risk businesses that includes General Liability Insurance and Property Insurance. In fact, Business Interruption Insurance is more often found as part of a BOP or other policy than as a freestanding policy.
Useful Add-ons for Your Business Interruption Insurance Coverage
Certain businesses may require protection beyond what a standard Business Interruption policy offers. For these businesses, certain add-ons are available. These include…
- • Extra Expense Insurance: If your usual facility is less expensive than the one you are temporarily renting while the other is being repaired, interruption insurance pays for the old rate while the "extra expense" rider accounts for the rest.
- • Contingent Business Insurance: This is for indirect causes like when your supplier is affected by a calamity. In such cases, there may be no direct damage to your business but you might still be forced to stop operating temporarily until you can find a new supplier.
For your business to earn a profit, it must operate. Interruptions can lead to losses and even, in some cases, permanent closures. Business Interruption Insurance can help tide you through an unexpected calamity safely so you can resume operations.
Business Changes That Might Affect Your Insurance Needs
Small businesses can change dramatically in a matter of months. Whether you’re hiring new employees, offering new services, or upgrading to a bigger office, your structure may vary widely from one month to the next.
To ensure that you enjoy risk protection no matter how your business grows or shifts position, be sure to check with your insurance agent if you make any of the following changes.
Hiring or Firing Employees
As your balance of contractors, part-time workers, and full-time employees shifts, your insurance needs will, too. As you incorporate new employees into your company, be sure to update your insurance policies to cover their activities, from transactions conducted on behalf of the business to an injury they suffer on the job.
Relocating the office means a load of new documents, compliance initiatives, and legal wrangling. As part of moving the office to a new location, you'll have to update all legal documents, including your business insurance policies. Allow a time cushion to update your policies, because your new workplace may have a different risk profile than your old one.
(FYI: workplace-related factors that might affect your insurance needs include square footage of your office space, security features, and exposure to natural disasters.)
Purchasing New Equipment
Because a your Property Insurance premium varies depending on the type and volume of hardware and equipment your business uses, it’s a good idea to update your agent if you make any major purchases. The smaller your business is, the more likely a single purchase will affect your coverage needs.
Changes in Goods or Services Offered
Adding a new item to your inventory or launching a new service could affect your insurance needs, particularly if you carry a Professional Liability (aka Errors & Omissions or Malpractice) policy. Your insurance agent can help you identify the risks associated with your latest offerings and determine what kind of insurance will offer you adequate coverage.
Significantly Increasing or Decreasing Revenue Levels
Increasing revenue is the goal of many small-business owners, but doing so often means insurance needs will change. Most noticeably, your policy coverage limits may need to increase if your business’s revenue significantly increases. Decreases in revenue, too, can affect your insurance needs, so be sure to discuss actual revenue and expected revenue levels with your insurance agent.
Are You Prepared for these 5 Sneaky Small-Business Risks Coming in 2013?
As small-business owners finalize their budgets and revenue goals for 2013, most are trying to anticipate the technological, economic, and political events that will impact their business in the coming year. From a risk management perspective, that’s an excellent strategy: after all, an ounce of prevention is worth a pound of cure.
To ensure that you’re setting the stage for a prosperous 2013, check out these five ways risk might sneak up on you in the coming year.
Employees in 2013 will be using mobile devices in the office and to conduct work on-the-go more than ever. While this can yield great gains in productivity, it also exposes business owners to increased risk for data breaches, hacking, and the exposure of sensitive data—and only about 46 percent of small-business owners currently have a mobile risk-management plan in place.
To minimize the odds of a disastrous data breach, business owners can implement a four-pronged policy: first, ensure that all mobile devices used for business purposes have locking features. Second, provide access to business-related information only to those employees who absolutely require mobile access to get work done. Third, implement software that offers the option to clear devices remotely when triggered by certain scenarios (such as multiple failed login attempts).
Finally, ensure that your cyber liability certificateis up-to-date and that your coverage is adequate for the risks your business face.
Hurricane Sandy was just the most recent in a series of weather systems that have led analysts to agree that the “new normal” will mean more intense storms that cause more damage occurring more frequently. This means that business owners need to be prepared for not only property damage (which can occur from a host of natural disasters, including fires, floods, earthquakes, ice storms, and more) but also for the loss of business that can accompany a serious storm.
Luckily, preparing for weather damage is fairly straightforward: adjusting property damage insurance to accommodate new risks, reevaluating structures and storage facilities, and implementing an emergency plan go a long way toward mitigating risk.
Budget Cuts = Risk of Lost Business
As we teeter ever closer to the fiscal cliff, small businesses face a host of risks. With longstanding tax deductions (such as the deduction for charitable contributions) in jeopardy, nonprofits could see their bottom lines affected, and with tax rates uncertain, small-business owners of all stripes could suffer a serious blow to their take-home pay.
What’s more, niche goods and services providers may face a dip in demand if the wealthiest Americans are asked to fork over higher taxes. To prevent unpleasant surprises, small-business owners in these fields may want to adjust their revenue and spending expectations.
New Workers’ Compensation Laws = New Risk Levels
Several states recently passed laws or witnessed court rulings that could change how workers’ compensation cases are handled in 2013. In Illinois, for example, workers who travel on the job could be eligible for significant settlements for injuries sustained on the road, even if they were not directly related to the job.
In North Carolina, a proposed bill that’s expected to pass would require employers to make public details about their workers’ compensation insurance, which could lead to fines or penalties for noncompliance. And in Florida, rates are slated for a 6.1 percent hike on January 1.
New Healthcare Requirements = Costs and Penalties
The good news about the health care law changes taking effect in 2013 is that small-business owners with fewer than 50 employees won’t be required to provide health insurance. In addition, studies show that 83 percent of small-business owners will be eligible for subsidized care.
For businesses with between 10 and 50 employees, however, employer healthcare costs are predicted to rise by 6.5 percent. In light of that increase, almost 60 percent of business owners in that category have expressed plans to shift costs to employees, but this could have long-term retention fallout.
Which 2013 Risks Does Your Business Face?
Want more information about how your business’s risk will change in 2013 and beyond? Check out our blog or follow us on Twitter @insureon for the latest updates.