When Protecting your Business Insurance
Becoming an entrepreneur takes constant learning, even on subjects that are boring and complex. Take insurance, for example. You have to know the types of risks that are involved with property, injuries, negligence, and a host of other losses and labor intense scenarios, that could happen. These liability safeguards do not even begin to address mandatory coverage and health insurance. Insurance for a small business can also be the most salty monthly expense that you have.
Insurance That is a Must
There are two types of insurance that every employer, that has employees, must carry. The first is Workers’ Compensation Insurance. Either you can be self-insured or carry a state funded policy, but it is a national law. Employees that make claims of workplace injuries or illnesses, are covered by this insurance. The second one is unemployment insurance tax. This money goes into a state fund that is used in the event that you have to lay off an employee. Even if you fire an employee, an independent party can rule against you and grant the claim. The bad news is, that the more claims you have, the higher your percentage of tax is required.
Yes, employees are expensive to have, in more ways than one. If you happen to hire an employee that knows how to play the system, you could be in big trouble. Let’s say that you have a small business that makes artistic products out of sheets of paper. Nothing dangerous here, you say. But, hire someone that has an allergy to dye, and your problems have just increased ten-fold. It begins with a sick day and a visit to the doctor. You receive a phone call, with the news, that your dye is making your employee sick. After allowing Workers’ Compensation Insurance to pick up the tab for every treatment imaginable, you realize that this employee just has to go. In kicks the unemployment insurance.
Customers that turn Rabid
Another form of insurance, while not required by law, has to be purchased. Without General Liability Insurance, one claim can put you out of business, in a heartbeat. For example, you have a front door for customers to walk through. Although you maintain your property very well, a customer accidentally shuts a small child’s hand in your door. While this cannot be considered your fault, or the door’s, the liability falls upon you, the entrepreneur. The cost of an emergency room visit is not enough to break you, but the personal anguish and suffering, is. A $500,000 lawsuit is not unusual for businesses to be staring at, especially with hungry lawyers leading the charge.
Product Liability Insurance plays the same type of role in protecting your company from claims of causing bodily harm. Even a piece of paper that has been turned into a delicate sun catcher, can have claims made against you. Paper cuts, getting a piece of paper in the eye or no safety stickers that warn against being a potential fire hazard, are a few examples of the ludicrous, but real claims that customers can make.
How to Deal with Ugly Employees and Uglier Customers
The first step in protecting your business from irrational behavior from employees and customers, is to locate a really good insurance agent. You may believe that all agents are the same, but they are not. Interview insurance agents that have knowledge in your specific industry. Find out how long they have been in business and what types of horror stories that they have had. Nothing makes a hard crust like experience. Next, ask for a list of the insurance companies that they represent and what type of services they provide. Many insurance companies offer their own legal counsel that will defend your rights, clear to the bitter end. Others will drop you like a rock, as soon as a claim is filed. Check out their history and quiz your new agent about the experience of working with them.
If you do not have the backbone for hiring, don’t. Use a temporary agency that absorbs all of the liability for the first 60 to 90 days. Let them drill potential employees and run background checks. You may think that this is a cruel way to treat an individual that just wants a job, but once you have been stung, you will find that there is no one that is adequate. Keep what respect you have for those that deserve it, by giving them time to prove themselves.
There are other types of insurance that you may wish to consider in your particular line of work. Professional Liability Insurance will protect you against a presentation of goods or services to clients. If you have a separate property where your establishment is located, consider Commercial Property Insurance. This policy will guard you against damage from weather, break-ins, or other types of peril that can occur in your area. Home-Based Business Insurance should be looked at if you run your business from your house. Although your business is technically a part of your home, most Homeowners’ policies will not cover this space, equipment or supplies.
You probably have a headache from considering the consequences of not having the proper insurance and a great agent, but it’s better to feel the pain of setting up a plan that will protect your business, than to be left exposed to the real harm that can, and will, occur.