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Loading ...According to the National Federation of Independent Business, small business owners cite employer sponsored health insurance as their biggest source of concern. A recent SBA report reported that the two most important factors associated with being uninsured are (i) firm size and (ii) wages. There are a lot of healthcare plan options for business options:
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Group Plans - There are several types of group plans.
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Traditional Plans- covers reasonable healthcare expenses. Insured may go to doctor of choice.
- HMO-covers reasonable healthcare expenses but insured must utilize doctors, provides within the HMO’s network.
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Point of Service Plans - just as it sounds, fees paid as employees receive services. These plans often have additional fees that are burdensome to the plan participants. Therefore, FFS plans should be more of a last resort.
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Medical Savings Account (MSA) Plans - this is a consumer directed plan. It allows a company’s employees to have a tax savings account that may be used for medical expenses. These plans generally have high deductibles.
In addition, to healthcare insurance, there are several types of insurance that a business owner should have a basic understanding of to ensure the business and employees are protected.
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Business Interruption - Insurance that protects against natural disasters interrupting a company’s operations. For example, if your business is located in California and you would have sever setbacks from an earthquake, you would likely have business interruption insurance.
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General Liability - Insurance that protects the assets of your business when you or your business is sued. The amount of coverage needed is based on several factors. Therefore, there are several issues to consider when determining general liability policy amounts so its important to have a general understanding of General Liability Insurance.
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Healthcare Insurance- There are a lot of healthcare plan options for business owners.
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Life Insurance - provides a payment to designated recipient upon the death of the insured. For example, business partners typically have life insurance policies out on one another.
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Key Man Life Insurance - is a variation of Life Insurance and provides payment not only upon the death of the insured but also prolonged illness or capacity to function.
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Product Liability - provides coverage for products manufactured and distributed by a company. For example, if a toy manufacturer adheres to all safety guidelines but one of its toys accidentally hurts a child, the toy manufacturer’s product liability policy could cover some or all of any plaintiff awards.
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Property Insurance- provides coverage for business buildings (if owned by business owner) and business or equipment. Some common items include chairs, desks and equipment. In addition, there are specific property insurance policies that protect against loss of income from earthquakes, floods, etc.
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Workers Compensation Insurance - provides benefits to an injured worker. Each state has its own laws and policies for workers compensation insurance. All states require workers compensation insurance for all employees with minimal exceptions (e.g., business owners). Workers compensation policies can be complicated.
General Liability Insurance - More Detail
The general liability insurance policy covers the insured for such claims as bodily injury, compensatory, general, personal injury, and property damage, among others. Punitive damages are not covered. A general liability policy specifies a maximum amount the insurer will pay per occurrence. For example, if your company is sued for $5 million and has a cap of $4 million for its general liability insurance, your company would need to pay $1 million if your company lost the case. But, there are ways for you to further protect your company. Your company could purchase umbrella liability insurance, which is used to cover payments that exceed the cap on the general liability insurance policy.
General liability insurance depends on some key factors:
- State(s) of Operation - If a state has a history of large awards to plaintiffs, then a business should consider carrying a higher cap on its general liability insurance policy. This will help protect the business against these larger plaintiff awards.
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Perceived Risk - A company should consider the risks inherent in its business. For example, a business that manufacturers large farm equipment has a greater risk of being sued (and for larger amounts) as compared to a business that sells flowers.
