Just the sound of the word insurance has many of us rolling our eyes in the back of our head. Insurance is confusing and often difficult to understand yet necessary for every business owner. Business insurance is the safety net necessary for your business to survive a catastrophic event. The following are five key insurance issues that you must address to protect the future of your business:
1. Worker’s compensation insurance – If you have employees you must address workers’ compensation insurance. Every state has its own statutory requirements. Texas workers compensation laws allow for employers to reject workers’ compensation and carry occupational injury insurance coverage instead. There are some exceptions, such as construction contracts for governmental entities where the workers’ compensation insurance is mandatory.
2. Auto Insurance – If you have a personal auto policy and you own your own small business you may want to consider purchasing a business auto policy or adding a business endorsement to your policy. In the event of an accident on company time, your personal auto policy may exclude coverage. Check with your insurance broker or carrier.
3. Reputation – In this day and age of the internet every person is now a witness with a powerful tool in their hand – a video camera. It takes a minute to upload video to You Tube. A business reputation takes years to build and can be destroyed in one second. Make sure you address reputational risk and crisis management with your employees and create a plan to minimize your exposure. For larger companies you may want to add an endorsement for reputational risk coverage onto your existing business policies.
4. Third party liability – a customer visits your office and trips and falls in the lobby. A product causes injury or harm to a customer. These days claims are more frequent than ever and you need to be protected. A general liability policy in place can save many a small business from potential collapse in the event of a third party allegation. Remember allegation is all that is needed to file a claim – proof of fault is not necessarily required. The legal fees alone to defend such allegations can amount to thousands of dollars.
5. Employment Practice Liability -provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. It covers your organization, including its Directors and Officers. Employment Practice Liability claims rose in Texas by 14% from 2009 – 2011. In today’s world, very few people are not protected. Today, the only people who are not protected by EEOC are white, unmarried, heterosexual males under the age of 40. In this current economy people are desperate and file claims in hopes of hitting the jackpot. An employee does not have to pay a dime to file an EEOC claim. The burden of proof is on the employer as well as the cost of defense.
Business owners have worked hard to grow their business. By addressing the transfer of risk and insurance requirements owners can sleep relatively well at night in order to keep the money they have worked so hard to make. Finally, an excellent insurance broker that is familiar with your line of business is the key to having the right insurance in place for the right price.
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