Find out what most business owners don’t know about their insurance premiums and how you can buy insurance a smarter way.
Everyone needs insurance, especially business owners. It’s absolutely vital they are well covered not only personally, but also to protect their business against adverse events or shareholder buyouts. Over time, the cost to the business can end up being significant, but the cost of not having insurance could be even larger. But there are ways to structure insurance premiums that can provide big savings for business owners.
When you take out insurance there’s usually an element of commission included in each premium you pay. If you’ve placed your insurance through a broker, then your broker receives this commission (it’s how he/she gets paid). Placing your insurance directly with the insurance company won’t get rid of the commission component either. Usually the insurance company takes that commission, as they don’t want to undercut the brokers they depend on for business.
The commission component included in your premiums can be anything from 0% to 250% of your first year’s premiums. The insurance company costs this into your premiums (ie. a portion of your premium is actually going in commission and not to pay for the insurance). Every year of your contract thereafter, your broker is still paid a percentage of your premiums (plus any premium increases) in commission. If you consider that you may have this insurance for 10-20 years or longer, then the commission component can be substantial over time.
Clearly, the commission rate will make a big difference to the cost of your premiums. But who decides what this rate will be? Your broker does.
Obviously your broker is entitled to be paid for the work they’ve done – advising you on the best insurance product for your needs, placing the insurance for you and looking after you thereafter. But there are a number of ways your broker can be paid handsomely while you make savings at the same time.
People are either oblivious to the fact there is a commission component, or they operate under the assumption that you have to pay it. There are a number of alternatives when it comes to structuring and paying insurance premiums. The trouble is, you probably don’t know about them and nobody’s bothered to explain them to you. Because it’s your money, we think you should know about the alternatives, and you should be the one to decide how your premiums are structured.
Here are 3 ways you could buy your insurance:
- Full commission component
- Part commission component and part fee
- No commission component and full fee
Fees vs Commission
If you buy your insurance by paying a fee, not only can this be tax-deductible to your company, but you pay it once only, not every year for the life of the insurance contract. The savings are obvious.
One client who opted to pay a once-only fee rather than commission, saved himself more than $14,000 in the first 10 years of the contract. He’s young and his insurance contract will continue for quite some years – which will make his savings over time substantial.
Just how much you’ll save depends on the type of insurance you’re looking to put in place as well as a number of other things. This can be accurately measured when the time comes to place the insurance, so that you can see how much you’ll save and be able to make informed decisions about your options.
There is almost always more than one way to buy your insurance and there are big savings to be made if you are given the knowledge and shown the alternative methods available to you.
While you’re there check out our last special offer for 2013 (it’s FREE) – Business Owners Essential Risk Review (available at the link noted above).
Is Your Disability Covered? Know Your State WCL
Disabled workers often face a set of challenges which their colleagues may not even be able to comprehend, much less empathize with.
Even when they work with an employer who provides them with the support they need to do their job to the best of their ability despite their disabilities be they visible or invisible.
Even though all employees have the right to employment without being discriminated against on the basis of disability, they may not have the same provision in place if they leave their home state to pursue a job elsewhere.
Different states have different rules and while you have federal protection against discrimination, some different states have subtly different attitudes towards individual disabilities especially when it comes to workers’ compensation.
Whether you have an existing disability or want to ensure that you’ll have the right to receive workers’ compensation if you suffer a debilitating injury at work it’s worth familiarizing yourself with the disparity between states (and even between organizations).
Workers’ comp is mandatory in all US states… except one!
You could be forgiven for assuming that workers’ compensation is a right for employees in all 50 states and while it is mandatory in most it is not mandatory in Texas.
Of course, that does not mean that a Texan employer will not necessarily award workers’ compensation to their employees, nor does it necessarily mean that an employer’s workers’ comp provision will cover your work-related disability outside of Texas.
This is because different employers have different forms of insurance and thus there may be a disparity between local law and employer policy.
It’s highly likely that an employer in Texas will have a worker’s comp provision in place, but employees will have the option to opt out of it. These people are referred to as “nonsubscribers”.
Where policy meets insurance
Even in states where workers’ comp is mandatory it is not entirely state run. In many cases worker’s comp provision is a combination of state legislature and private insurance policies.
The only states that rely on entirely state-run programs for workers’ compensation are North Dakota, Ohio, Washington, and Wyoming.
Businesses can purchase insurance for compulsory and non compulsory components meaning that two employers in the same state may offer different workers’ comp provisions which cover a different range of disabilities.
Workers’ comp: Know where you stand
As you can see, it’s important to know where you stand in terms of workers’ comp. Read this article by Terry Katz & Associates: what disabilities covered under workers comp laws. There are two ways in which you can (and should) check this out further.
Check employer’s obligations
First, you should check your employer’s (or prospective employer’s) legal obligations by familiarizing yourself with your new state’s workers’ comp laws (WCL). This will outline the bare minimum that your employer is entitled to offer.
However, their insurance provision may be in excess of this legal minimum so even if you have an existing disability that is not covered by local WCL this does not necessarily mean that it’s not covered by your employer.
Ask what disabilities are covered
This is why you should know exactly where you stand with your employer before you join the company. Ask what specific disabilities are covered by their workers’ comp insurance policy. This may be in their employee handbook or their Human Resources department may be able to help.
Reasons Your Business Will Need To Add Vehicles To Its Fleet
Running a fleet of vehicles in your business is costly exercise, so it’s wise to keep up with developments in vehicle technology, and other areas like financing and tax obligations.
Reducing costs and boosting business productivity is a driving force of change so when is it a good time to add more vehicles or change out the vehicles you’re currently running?
We have some of the reasons right here.
Why Your Business May Add Or Change Its Vehicles
Growth in staff who will need company vehicles
This is a pretty simple and obvious reason to add to your company’s tally of vehicles. As more and more people join your company, you might find that they need to embark on commercial travel as part of their job.
What you need to consider is what type of vehicle will be service their requirements in their role for your business, plus how your business should fund the purchase. There’s also the tax implications to consider too, which will vary depending on where your business resides. Contact your professional advisors and also do some research online on both tax requirements and funding options.
The Telegraph in their article identifies how businesses can choose vans and the financing options including leasing finance.
Your business needs a new type of vehicle
You should take into account not only the number of your workers who might need commercial vehicles at any particular time but also how exactly they would want to use those vehicles.
Fleet News notes that many firms adhere to an “open choice” policy, whereby employees are free to choose the make of car they would like. Don’t just consider the brands, though, but also the colours – some aren’t always business-friendly – and the seating capacity in case you want to transport clients.
To save on running costs and boost productivity
You might already be aware of the eco-friendly benefits of switching from a gas-guzzling vehicle to an electric one. Naturally, these benefits hold true in the business world, too. However, all the same, remember not to insist on such vehicles if there would be worrying practicality trade-offs.
For example, a driver who does over 20,000 miles annually might not find a purely electric vehicle cost-effective. Also, keep in mind that setting a CO2 cap can be a worthwhile alternative green measure.
However most businesses reliant on large vehicles in their fleet have their eye on the advancements in autonomous vehicles like large trucks and vans says better wise insurance. They are keen to find the best prices for fleet insurance and save on costs and boost productivity.
Your business wants to trim its tax obligations
This is another strong reason to consider investing in green tech for your fleet. You might not have realised how much you could save on van tax from switching to a zero-emissions vehicle. Various Government initiatives have ensured this for UK drivers.
Whereas, in the UK, most new small and medium vans attract a universal tax rate of £250 yearly, no annual road tax applies for electric vans. The tax savings could enable you to polish up other aspects of the business.
Get the best deal for your business
When sourcing insurance for multiple vehicles in a single fleet, it’s possible to save money. Check with your broker so you get the best deal by paying less for each extra vehicle you add to the policy.
How Workers’ Compensation Insurance Protects Businesses
Whatever your size from startup, to small business to large corporate, as a business owner, or CEO your many responsibilities include protecting the company against lawsuits and that includes litigious employees.
Workers’ compensation insurance is for the employee. It provides support with wage replacement and medical benefits when employees are injured at work. There’s a more detailed account of workers compensation explained here.
Although workers’ compensation is technically designed to protect workers, it also provides protection for businesses. It can shield your business from lawsuits filed by employees who claim that you or an employee you hired caused an on-the-job injury and also fines.
Protects The Business From Fines
For starters, it protects you from fines. All states, with the exception of Texas, require businesses to have workers’ compensation insurance.
If an employer fails to obtain Workers’ Compensation insurance, they are subject to administrative fines and potential criminal liability and premium penalties and may be ordered to close business until insurance has been obtained and will be held financially responsible for all costs arising from a work-related injury.
The quote above is from Jason D. Mills & Associates
With adequate workers’ compensation insurance cover your business can also be protected in other ways let’s look at a couple of them.
Limits Legal and Financial Liability – Work-Related Injury or Illness
Employees get extensive cover including: medical care for illnesses or injuries; vocational training, income replacement, funeral expenses and death benefits if the employee is killed on the job; and in return employees are prohibited from suing employers for on-the-job injuries, except for cases of gross negligence that leads to an employee’s death.
When your business has the right level of cover, it’s not liable for:
- Medical costs
- Lost wages
- Fines for not having coverage
- Damages incurred by the employee, which may include pain and suffering, punitive damages and loss of life enjoyment
Gets Employees Back to Work
Workers’ compensation ensures that workers receive the medical care and rehabilitation they need to get back to work.
Thus when an injured employee’s needs are met, they are more likely to remain in the job and with the company so it’s a win win for all parties.
An absent worker no doubt puts more pressure on everyone in the business, especially if it’s a small business. Ideally a temporary hire can fulfil the role in the interim.
Implementing an effective transition program, is also wise as it will speed up the the injured employee’s return to work while ensuring they are able to handle all their tasks safely.
With adequate workers’ compensation insurance, employees have the security and peace of mind that they will be taken care of if they are injured on the job.
For businesses irrespective of size, having the right level of coverage is professional and it shows that you are a responsible employer who cares about your employees.
Not all states in USA make the cover mandatory so if your business is located in a state that doesn’t require it,
your business will be attractive to new staff hires and secure employee loyalty.
Should Your Business Hire a Public Adjuster for Insurance Claims?
Businesses get insurance to cover for theft, accidents, property damage and making a claim is common occurrence especially for the 10 most common business insurance claims.
In this article we look at general role role of adjusters for insurance claims. We also hone in on public adjusters, their role and how they work with other insurance claim adjusters on behalf of policy holders. Plus we provide tips on what research to do when choosing a public adjuster for your business.
Public adjusters are one of three types of insurance claims adjusters and it’s worth knowing how their roles differ, so you can work out when it’s appropriate to engage the services of an adjuster for your business.
Types of Insurance Claims Adjusters
There are three different types of claims adjusters, each are explained simply below:
Company or Staff Adjuster
The role of a staff adjuster is to manage the claims process for the insurance company. They are employees of the insurance company. It’s this group, policy holders communicate with regarding their claims.
An independent adjuster is engaged by insurance companies to manage the claims process. They are self employed or independent businesses and as they’re contracted to insurance companies they can manage many different claims at the same time.
This type of adjuster is the policy holder advocate – hence the ‘public’ also independent, and only works for the policy holder. Claimants hire these professionals to ensure that they are getting the maximum payout possible from the insurance company.
Reasons to Hire a Public Adjuster
There are several reasons that a business might hire a public claims adjuster to help with their insurance claim.
For large loss claims – If the damage/loss is substantial and there is a lot of money at stake it makes sense to have independent help. There are a lot of variables which affect the value of your compensation and professional assistance can definitely maximize the payout.
If there is a dispute – If you have a dispute with the insurance company it can result in a tricky situation. In such cases businesses often seek outside assistance to help them achieve a favorable outcome.
If you’re time constrained – Another common reason for businesses to use a public insurance adjuster is to save time. If the adjuster is dealing with the claim it allows personnel to get on with their core functions which serve the company’s goals.
Questions to Ask Before Hiring a Public Adjuster
If your business is looking to hire a public insurance adjuster then it is good practice to do some screening first. Finding the right professional will have a huge impact on the outcome of your claim. If you’re in the USA these questions are highly relevant.
1. Are You Licensed to Practice Public Adjusting in My State?
Although most of the public adjusters will have a license with them for their identity, it is crucial to check with the state department of insurance if they are properly licensed in your state. Napia has important information you may need about certified and licensed public adjusters in a particular state.
2. Will You Handle My Claim Personally?
It is important to consider using a public adjuster who can personally handle all your issue. Along with those acting as public adjusters without a proper license there are also some firms that may outsource or pass off the work to others rather than handling the claim themselves.
Research shows that the process is much easier to deal directly with the public adjuster who will be dealing with your claim.
3. How Many Claims Have You Sorted Out in This Area?
Knowing the number of claims a public adjuster has been able to sort out in your area will help you determine how good they are at their job. Public adjusters who have worked many claims in your area are also highly likely to be successful.
4. What Are Your Credentials, Public Adjusting and Construction Estimating Skills and Experience?
Public adjusting is one of the most difficult jobs in the world. You can easily find some of the credentials and experience of a public adjuster by checking their references and reviews online.
A public adjuster, in most states, cannot do the contractor job of estimation and the contractor cannot handle the job of a public adjuster. This can create a conflict of interest. However, a good public adjuster should have the necessary building and construction knowledge and be able to help find or refer the needed contractors.
Make sure you examine the credentials and skill set of your public adjuster since an under experienced and poorly qualified one may lead to hiring the wrong professionals.
5. What Are Your Fees and Charges?
The fee depends on the states one resides in. Different states have different regulations on what public adjusters are allowed to charge.
However, in every state it is crucial to establish an agreed upon fee up front and have that in a written contract with your public adjuster. It is also important to research the price public adjusters charge for your type of claim in your area, so as not to be largely overcharged.
There are different types of adjusters and public adjusters work for the policy holder. Their role is to get the best outcome for their clients.
Do your homework before selecting the appropriate person or team to work on your behalf.
Six Reasons Your Business Still Needs Insurance
It takes money to start a business. Even once it’s up and running, you’re still going to need finances to continue trading and invest in it’s growth.
One of the reasons why you need financial backing in business is down to safeguarding your investment and reducing the potential risks to your operation. It is vital that you have the right insurance coverage in order to protect you and your business from the unexpected. If you want to protect your assets, then having the wrong insurance coverage can quickly come back to bite you in the bank balance.
If you’re not convinced that you even need insurance, here are the six reasons why you might want to reconsider.
1: Liability protection
If anyone suffers an injury in your workplace, then you can quickly face legal proceedings. Liability claims are potentially very damaging to a business.
UK small business insurance provider, Hiscox says: business insurance can make sure that your business is protected from liability claims and can help you to continue trading without a huge payout from your personal finances.
Liability coverage can also cover the costs of legal proceedings, meaning that you have little stopping you from continuing to trade without the fear of workflow interruption or financial damage.
2: Property protection
Both the premises that are your base of operations and the equipment that you have inside it need protection. Natural disasters can cause major damage and can result in massive workflow interruptions.
If you have the wrong coverage or none at all, then the finances that you need to recover will have to come from your own resources. For theft as well, the right insurance will ensure that your business can resume trading as soon as possible.
3: Your human assets
If you have employees, then you’re going to need to protect them. That’s why having a disability or death factor included in your policy will be vital. Protect your most valuable employees by offering this safeguard. Some business owners even offer life insurance as part of the recruitment package, making them far more appealing to the best hires.
4: As part of your business plan
All businesses need a business plan. Not only is it essential for managing your growth strategy and fine-tuning your marketing campaign, but it is also an essential part of sourcing financial backing.
Investors that you hope will offer financial support for your business will be more likely to invest money in your business idea if you have the right coverage in place. Lack of insurance will usually mean higher interest rates from the investors that are willing to put money into an uninsured business model.
5: Your home insurance
If you have a home office and you’re trading online from the comfort of your own home, you might assume that your home insurance is sufficient. It’s not.
Both medical and liability claims are not going to be supported, and theft is not usually going to be covered by home insurance policies if you lose essential office equipment.
6: The legal necessity
Many countries make it a legal requirement that you have some form of insurance. In the US, this will change depending on your state. No matter which country you’re planning to set up your business in, make sure that you are aware of the legal requirements regarding your insurance coverage options.
You will no doubt be investing plenty of your own time, money, and energy into your business. Launching a business is always inherently risky, but you can reduce the potential risks by protecting yourself. Make sure that you understand just why business insurance is so essential, and your business will be far more secure.
What SMEs Need To Know About Workers’ Compensation Insurance
Small business or SMEs often overlook the need for adequate insurances. This is due to their focus on investing any spare cashflow and capital in growth strategies. There are also a lot of different types of insurance so it can become overwhelming when you’re told you need separate business insurance policies for everything. Therefore, if you’re not sure what to do with Workers’ Compensation insurance for your staff – read one. In this article we provide a broad overview of what it is and why your business probably needs it!
Workers’ Compensation Protects Your Business
Accidents can happen in the workplace, even when businesses are careful and safety-conscious. Three million workers were injured while on the job in 2014, so work injuries are commonplace and they can happen to workers in any business.
Workers’ compensation insurance ensures that employees who suffer job-related injuries and illnesses receive the medical care they need.
Irrespective of who’s at fault for the accident, workers’ comp. will kick in if an employee is injured, while on the job. There is a trade-off however, employees have limited rights to sue their employers for these injuries or illnesses.
Workers’ Comp Insurance May Not Be Mandatory
In some states workers’ compensation insurance is not mandatory, but that does not mean that you should not purchase it. When an accident occurs and there’s an injury, your business could be up for the costs and maybe a lawsuit.
In states where it’s mandatory your business could face stiff penalties if it doesn’t have adequate cover.
State laws vary on coverage requirements depending on the type of business, number of employees and the type of business. Some states may exclude certain types of workers and their law covers:
· Which injuries are covered
· How injuries are evaluated
· How medical care is delivered
· The extent of the benefits the employee may receive
Workers’ Comp. Insurance Managed at State Level
It’s usual practice for businesses to take out a specific workers comp policy. Each state will determine whether the policy is provided by the state, private insurers, or both.
How the states differ is there are five states and two U.S. territories that require employers to obtain coverage through state-operated funds. These states include: Ohio, North Dakota, U.S. Virgin Islands, Puerto Rico, West Virginia, Washington and Wyoming. If your company does business in any of these states, you will need to purchase coverage through a state-operated fund.
Some states will not require employers to have workers’ compensation insurance if employees are paid exclusively through commission. It’s important to check your local regulations to see how coverage is handled and exclusions that may apply to your business.
In states that allow policies from private insurance companies, it’s important to make sure that you choose a company with experience handling workers’ compensation claims.
Just like with any other insurance policy, premiums will depend on a number of factors, including your payroll and industry classification. Premiums for dangerous activities may be higher, but if your business operates in a risk-prone area, your premiums may also be higher.
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