Hiring your first employee is exciting. It means your business is growing and you need the additional help to keep up with the demand. But expanding your business comes with some uncertainties, too. For example, you may wonder what new liabilities you have and which insurance policies can address those risks.
Sounds familiar? If so, here’s your crash course in your new responsibilities from an insurance standpoint.
Small Business Insurance 101: What Coverage Do I Need?
Before we go over which insurance policies employers need, let's look at the three coverages almost every business requires:
- General Liability Insurance. This steps in when a third party (non-employee) is injured on your property, suffers property damage at the hands of your business, or accuses your business of causing reputational damage.
- Commercial Property Insurance. You need this to cover your buildings, equipment, and other business items.
- Errors and Omissions Insurance (Professional Liability Insurance). When a client alleges your services caused them financial losses, you need this coverage to pay for legal expenses.
These are just the basics. To get an idea of their costs, see our small business insurance cost analysis. Once you hire employees, you need employer-specific insurance coverage.
What Employer's Insurance Do I Need?
Once you bring new employees onboard, your liabilities change dramatically. Suddenly, you're responsible if employees get injured on the job because it’s your duty to create a fair and safe work environment. You must also follow the guidelines enforced by the Equal Employment Opportunity Commission (EEOC) to prevent workplace discrimination and harassment. Plus, your business becomes responsible for any actions and mistakes employees make.
Being an employer is no easy task. To cover these additional liabilities, you can get two types of employer's insurance:
To get an idea of what you might pay for Worker's Comp, check out our page, "How Much is Workers' Comp Insurance?"
Workers' Compensation Insurance for Employers
Workman’s Comp coverage is legally required for most employers. You can figure out your requirements by looking up your state in our small business guide to state Workers' Comp laws. Or, if you’d rather have someone else do the heavy lifting, you can team up with one of our expert insurance agents who will makes sure your coverage complies with state regulations.
When your employees are injured at work, Workers' Comp can help pay for…
- Employee medical expenses.
- Replacement wage benefits.
- Disability / funeral expenses.
- Your legal expenses (if an employee sues your business over the injury).
The law holds you responsible for employee injuries and accidents at work. If someone gets hurt, you're legally obligated to pay their medical expenses. But when you have Workers' Comp Insurance, the insurance covers these costs so you don’t pay out of pocket.
Employment Practices Liability Insurance for Small Businesses
Employment Practices Liability Insurance (EPLI) pays for lawsuits when an employee sues your business for…
- Improper termination.
- Unpaid benefits or overtime.
Employee-employer lawsuits are among of the most expensive lawsuits a business can face. If an employee alleges you fired them unjustly, you could wind up owing hundreds of thousands of dollars in damages – enough to strap most small businesses. An EPLI policy covers your lawyer fees, court costs, and damages you owe an employee.
Do Small Businesses Need to Offer Health Insurance to Their Employees?
Answering this question is difficult because it depends on the size of your small business. Most small businesses won't need to offer health insurance to employees. However, the Affordable Care Act requires businesses with 50 or more employees to offer coverage or pay a fee for not doing so.
Insureon doesn't sell health insurance. However, you can visit the federal government's SHOP Marketplace to find health insurance for your small business.
Free Quotes on Employer’s Insurance
Whether you've hired your first employee or are still working as an independent contractor, insureon offers free quotes for all small business insurance policies. Simply submit an online insurance application to get your quotes sent right to your inbox.