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What Employers Need to Know About Workers Compensation Insurance

What Employers Need to Know About Workers Compensation Insurance

All states and the District of Columbia have workers’ compensation laws designed to protect employed individuals who get sick, injured, or killed on the job. Employers pay the cost of workers’ compensation by purchasing private insurance or state-sponsored insurance, or sometimes by self-insuring. Each state has its own workers’ compensation system, so the rules vary. As a business owner, you should know the following facts about workers’ compensation.

Workers’ compensation is a mandatory state-based insurance program

Workers’ compensation is a mandatory state-based social insurance program that provides workers with insurance protection against disability or death that occurs while at work. In most states, the workers’ compensation laws are compulsory and require businesses to accept the laws’ provisions and provide the specified benefits. In some states, coverage is elective, and employers can opt out of the state workers’ compensation system in exchange for the loss of certain liability limitations. Some states exempt businesses with fewer than three or four employees from workers’ compensation insurance requirements.

It provides employees with benefits in the event of a workplace injury

Workers’ compensation protects workers from workplace injuries, repetitive stress injuries, and occupational diseases. It pays four types of benefits:

  • Medical benefits
  • Disability benefits
  • Survivor’s benefits
  • Rehabilitation benefits

Employees who are injured or disabled on the job receive a fixed monetary award. In exchange, they give up the right to sue the business. If an employee dies as a result of a workplace injury, benefits are paid to the employee’s family.

Your business is responsible for providing coverage

Businesses are, by law, 100 percent responsible for providing workers’ compensation benefits. Your business can’t charge a worker for benefits provided under workers’ compensation or for any portion of the business’s workers’ compensation insurance premium.

Keep in mind that your business may be required by the laws of your state to post a notice in the workplace that provides the name of the workers’ compensation insurance carrier.

The rules for coverage vary by state

Your state mandates how much coverage you must buy, which employee classifications must be covered, and what percentage of an employee’s salary you’ll pay if he or she misses work due to a work-related injury.

Failure to carry workers’ compensation coverage, when required, may be punishable by fines, civil penalties, criminal penalties, exclusion from public contracts, and cease and desist orders. The rules and penalties vary by state.

All employees generally must be covered

Generally, all employees must be covered under state workers’ compensation systems. However, each state excludes certain classifications of workers from among the following:

  • Business owners
  • Independent contractors
  • Casual workers
  • Domestic employees in private homes
  • Farm workers
  • Unpaid volunteers
  • Maritime workers
  • Railroad employees (benefits are received under a separate federal law)
  • Federal government employees (benefits are received under a separate federal law)

Most workplace injuries are covered on a no-fault basis

Most on-the-job injuries are covered by workers’ compensation on a no-fault basis. That is, benefits are paid regardless of who is to blame for the accident or injury–the employer does not admit liability for the injury or illness, and the employee receives workers’ compensation benefits without having to sue. There are exceptions, though. For example, coverage may be excluded for injuries suffered when an employee’s conduct violates company policy.

Some accidents outside the workplace are covered

In most cases, your business is not liable for accidents occurring outside the workplace. However, there are situations when an employee is covered outside the workplace. Employees are covered if they are injured while:

  • Traveling on company business
  • Running a work-related errand
  • Attending a required business-related social event

Injured employees have the right to file for benefits

It is an injured worker’s right to claim benefits under workers’ compensation for a job-related illness or injury. When a worker is injured on the job, his or her claim is filed with the insurance company (or self-insuring employer). Medical and disability benefits are paid by the insurer according to a state-approved formula.

Your business can’t interfere with, coerce, discriminate, fire, or force the resignation of an employee for filing a claim under workers’ compensation. Your business can’t tell an employee not to file a claim. If an employee can prove that a business in any way harassed or fired him or her for seeking benefits, the employee can file a civil lawsuit seeking substantial damages.

Disclosure:The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Sterling Group United recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

Insuring Your Home Business

Insuring Your Home Business

If you have recently started your own business and work out of your home, you’ll probably need to upgrade your insurance program. At-home business owners often make the mistake of assuming that their homeowners policy covers their business equipment. In fact, your homeowners policy may include little or no coverage for your business property and business liability exposure. You also should consider the need for business interruption insurance, workers’ compensation coverage, and business automobile coverage. Finally, you should examine your need for life, health, and disability insurance.

Homeowners policy

Homeowners policies generally cover business property on your premises only to a certain limit. This is usually about $2,500. Coverage for business property away from your premises is even more limited. Most policies have a $250 maximum. That is the extent of insurance coverage for your business in the typical homeowners policy. You are not covered for business liabilities, including such things as a deliveryperson or a client injuring themself while on your property.

For a higher premium, some insurance companies offer an endorsement that you can add to the standard homeowners policy. An endorsement allows you to increase the liability limit for business property and add a small amount of general liability coverage. The endorsement is designed for very small businesses. However, even with an endorsement, your business is left with uncovered exposures.

Home office policy

Many insurance companies now offer the home office policy. This is a combination of a homeowners policy and a business owners policy. This policy provides adequate business liability coverage, business interruption coverages, and increased limits for your business property. Along with the traditional coverages found in a homeowners policy.

The business property limits typically begin at $10,000. Depending on the policy, the business liability limits may range from $300,000 to $1 million. The policy covers lost income and continuing expenses for up to one year in the event your home is damaged and you’re unable to work. The policy also covers loss of valuable papers and accounts receivable. All while offering higher limits for equipment breakdown coverage and business property used off-premises.

Business owners policy

This type of commercial policy is designed specifically for small businesses. Traditional business owners policies (BOPs) are very comprehensive because they cover buildings, business property used on- and off-premises, and liability. Also covered are computers and other business equipment, software, data, loss of income, continuing expenses, and professional liability for certain occupations.

Some insurance companies have created a new kind of BOP designed specifically for the at-home business. This policy is less expensive, and it provides broad-enough coverage for a larger business without duplicating your coverage. Please note, the new BOP would not cover your home structure, because it is already covered by your homeowners policy.

Umbrellas and professional liability

An umbrella policy provides increased liability limits beyond those in separate policies. For example, say you have a BOP with a general liability limit of $3 million. If you think you’ll need more than $3 million for your business, an umbrella policy will pick up where the BOP leaves off. If you purchase an umbrella policy with a $5 million limit, your total limit of liability would be $8 million.

For those in occupations that are particularly vulnerable to professional liability, a separate professional liability policy, usually called malpractice coverage or errors and omissions coverage, is a must. Examples of such professions include law, medicine, architecture, day care, and personal beauty.

Automobile insurance

If you use your personal automobile extensively for your own business, you’ll probably need to purchase a commercial automobile insurance policy. Examples of such small businesses are painters, caterers, and contractors. If you use your automobile as part of your business (e.g., a taxi service), you definitely need a commercial policy.

If you rent automobiles in the course of traveling for your own business, check your personal auto policy to see if it covers nonowned autos. Your auto insurance provider can help you determine the extent of your coverage and fill in any gaps.

Workers’ compensation

Even if you have only one employee, you need workers’ compensation insurance. Each state has its own minimum requirements for this type of coverage–contact your insurance agent or state insurance department for details.

Life insurance

Chances are, you already have a life insurance program in place. Though your individual life insurance needs may not change when you start an at-home business, the amount of insurance you have may change. For example, if you lost employer-sponsored coverage when you left your previous job, you may want to make up the difference so that you’re still adequately protected. You may also need more insurance to cover any debts or liabilities you took on to develop your business.

Key person life insurance

Key person life insurance covers financial loss to your business due to the death of your partner or a key employee. If the covered individual dies, your company receives a death benefit. There are several creative ways you can set up a key person life insurance plan. Contact your financial professional to set up the best arrangement for your business.

Disability insurance

This type of insurance is very important to consider when you have your own business. Ask yourself if you have enough resources to support your family if you became disabled and could not work. If you do have some savings, how long would they last? Most people need disability insurance to protect against the loss of income that can result from disability. Your ability to produce an income is an asset that should be covered like your house and your car.

Health insurance

Health insurance for the self-employed can be expensive and difficult to find. One affordable alternative may be to join a professional association that offers group health insurance to its members. Chances are, your profession has its own specific association in your area or state. If not, there are associations for small-business owners in general. Finally, your local chamber of commerce may have a health insurance program for its members.

Individual health insurance is very expensive. One way to buy yourself protection before finding a permanent health plan may be to purchase short-term health insurance. You will need to check if those policies are allowed in your state. These policies run from one to six months and are relatively inexpensive.

Meet with a trusted insurance advisor

With all you have to think about in starting and running your own business, reviewing and updating your insurance program can seem like an overwhelming task. Call us today and set up a complimentary consultation with one of our experienced and licensed insurance advisors. We can identify your needs, familiarize you with the relevant state laws, and recommend a suitable insurance program to meet them.

Disclosure:The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Sterling Group United recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

5 Reasons You Should Hire a Business Broker  

5 Reasons You Should Hire a Business Broker  

A business broker is a professional who can achieve several benefits for your company if you’re planning on selling it. Most companies want to preserve their business operations and reputation. They want to do whatever it takes to protect customers and key employees. With the help of a business broker, that becomes possible. Here are a few key reasons why you need one.

#1: Provide a Financial Analysis and Full Valuation

What you believe your business is worth isn’t necessarily what someone will pay for it. That’s an important factor to keep in mind. With the help of a business broker, you can ensure you have accurate information to share on the business’s financial health and earnings. You’ll also have a verifiable valuation that buyers want to see.

#2: Market Your Business Well

Finding a buyer is not as simple as it sounds. You may not want any buyer but the one that offers the objects and purchase price you need. A business broker can effectively create marketing materials to locate the ideal buyer for your company.

#3: Minimize Private and Confidentiality Losses

Many companies plan to make this sale happen, but they know the importance of keeping the entire process confidential. When you provide a business broker with this task, he or she can work to ensure proper disclosure statements are always used when interviewing or speaking about the sale.

#4: Buffer Between the Buyer and Seller

Like in any transaction, it is critical to have someone handling the negotiations for you. Your business broker can do that. He or she works as a buffer to communicate the details of the transaction. Many buyers want to work in this way because working with the seller can be difficult just due to the emotions in the process.

#5: Assist with the Financials

Your business broker will also work with you on the financials, giving you the tools and resources you need to get the maximum amount at closing.

Take the Steps Necessary to Ensure Your Business Is Thriving

No matter what risks you’re facing today, know that there’s help available to your business at Sterling Financial. Contact our professionals today to learn more about hiring a business broker and what this single move can do for your business and transactions.

How to Choose Your Small Business Insurance Plan

How to Choose Your Small Business Insurance Plan

Every small business faces risks as soon as they open their door and serve their first customer. Yet, many of these can be minimized with the help of financial tools such as small business insurance. The right policy can help minimize the risk that your company has to foot the bill for unavoidable and accidental incidents.

Is BOP Right for You?

Business owner policy, or BOP, is a great starting point for most small business owners. It provides property insurance for your company to protect the structure and your other assets. It also provides general liability insurance. This coverage helps you by providing protection from claims made by those visiting your location who may suffer injury or other loss.

Customized Policies

There is no one-size-fits-all type of small business insurance plan. Rather, it’s important for you to choose a policy that fits your goals and risks. This may include:

  • Commercial auto insurance to protect against risks to your business vehicle; this policy tends to include both liability and property protection
  • Worker’s compensation insurance that helps provide coverage for employee-related injuries or illnesses that occur as a result of working for you
  • Professional and umbrella liability insurance which provides a higher level of protection for your company for liability claims, lawsuits, and settlements

It is important to work closely with a business insurance agent to discuss the unique needs of your company. This includes selecting the right type of insurance coverage but also choosing policies that are cost-effective. A single fire, accident, or product failure can cause thousands of dollars in losses. This tends to be hard for a small business to make up. With proper insurance, a lot of that risk falls off your shoulders. You can focus on your business knowing you have insurance to cover many of these risks.

Planning for Your Small Business? Let Our Team Guide You

You don’t have to make decisions about your small business insurance plan on your own. Allow our professionals to help you every step of the way. Call Sterling Financial to learn more about the steps you can take to improve your business security.