Starting your own business is the first step towards achieving your dream of self-reliance and fulfillment in your career; however, the chaos of the world will try to bring your thriving business to the ground. You have the ability to prevent undue damage to your business when you purchase an insurance policy for your small business. There are many different types of insurance policies available for small businesses, which range from covering your business structures to your employees’ inappropriate actions, and you need to know what each policy means for your business
Business Property Insurance
If you experience a natural or man-made disaster, a Business Property insurance policy will protect your business from the associated damages, such as from weather, vandalism, or fires.
Liability Insurance
Liability insurance policies protect you against the majority of your concerns as a small business owner. This type of insurance is used to cover any possible issues involving a third party, which includes customers, landlords, products, and even medical expenses. If you were to have a customer trip over your merchandise, a Liability Insurance plan will protect you.
Worker’s Compensation Insurance
If one of your employees becomes injured while at work, you will be held responsible for medical treatment, lost wages, and pain and suffering. Worker’s Compensation insurance shows your employees that you care about their safety while working while protecting your reputation and finances from these unforeseen expenses.
Excess Liability Coverage
Although you purchase a variety of insurance policies to protect your business, you may find that your policy limits do not cover the financial cost of certain claims. In these cases, an Excess Liability insurance policy will provide a cushion above and beyond your existing limitations of liability.
Employment Practices Liability Coverage
This type of insurance for small businesses protects you against allegations of discrimination, harassment, and retaliation.
Life Insurance
Life insurance covers you, your business partners, your employees, or your spouse in the event of death by accident or other circumstances. It will enable your loved ones or friends to continue the legacy of your business.
Health Insurance
You may choose to offer your employees health coverage or purchase health insurance for yourself. The options for Health insurance vary in amounts respective of deductibles, copayments, and limitations. However, some changes have been implemented since the introduction of the Affordable Care Act, so please check with your insurance agent to select a policy suited to your needs.
It can be difficult to navigate the available insurance policies you need for your small business. However, it’s better to be protected against an unfortunate circumstance rather than lose your business and hard work.
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Being a business without workers’ compensation insurance in California is a serious matter. If an employee is injured during the course of business duties and the business is not insured, it does not mean that the business is absolved of its responsibilities. The Uninsured Employers Benefits Trust Fund was established to ensure that employees are still compensated for their medical expenses even if the business did not comply with the law. Using the power vested in this entity, it can pursue many avenues to ensure that the injured employee is compensated, including placing a lien on the business, imposing a stop order so that the business can no longer legally and delivering fines, penalties and jail time.
If you should decide that you do not want to carry workers’ compensation insurance on your employees and one of them becomes injured or sick while on the job, you will be responsible for paying 100% of the cost of their bills. Without obtaining adequate workers’ compensation insurance, an injured or sickened employee can sue your company to obtain the funds necessary to cover their medical bills. In addition, there is the potential that your business will be fined, penalized and even more for not meeting its obligations to its employees.
The California state labor board, the Division of Labor Standards Enforcement, is responsible for ensuring that businesses comply with a range of labor standards, including having an adequate amount of workers’ compensation insurance. If the Division determine that the business was lacking in this regard, in addition to fines and penalties, it is possible that you will serve a jail sentence in the county jail. A stop order is also likely to be issued that prohibits the business from using the labor of those employees who are not covered. It is a misdemeanor to not comply with such an order.
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Nearly all business owners carry some type of insurance. However, if you are carrying a standard business liability policy, it may be worth your time to review your policy and determine if you have employment practices liability insurance (EPLI) coverage. Not all liability coverage includes this important feature.
What is EPLI?
EPLI coverage includes wrongful termination protection for employers. This allows you to file a claim to cover the cost of legal defense anytime you are sued for wrongful termination. This insurance would also pay claims if you should lose your case.
What is wrongful termination?
Wrongful termination claims may be filed by an employee who feels they were fired from their job unjustly. Some of the common reasons why an employee may claim wrongful termination include:
- Age discrimination – employees over the age of 40 may file an age discrimination claim even if they were fired for other reasons.
- Other discrimination – claims may be filed if an employee believes they were terminated because of their gender, sexual orientation or a disability.
- Whistleblower termination – California law makes it illegal to terminate an employee for reporting certain actions including workplace safety, public interest or other activities that may be considered illegal.
- Written contract violations – while California is known to have an “at will” employer/employee agreement, employees who are fired and have written contracts may still be fired under certain circumstances. This may not prevent them from filing a wrongful termination suit.
Minimizing your risk of wrongful termination claims
Keep in mind, the better you document your reasons for terminating an employee, the less likely you are to face wrongful termination claims. Some ways to avoid this include:
- Documentation of wrongdoing – anytime you reprimand an employee it should be documented in their employment file.
- Witnesses can be helpful – if you need to have a conference with an employee about their conduct on the job, it may be helpful to have another manager or supervisor sit in on the conference.
- Consider consulting an attorney – if you need to terminate an employee, it may be helpful to discuss your strategy with an employment attorney first.
Oftentimes, wrongful termination claims are simply retaliatory but having EPLI coverage can make good financial sense for those unexpected claims.
Sources:http://www.business.ca.gov/StartaBusiness/AdministeringEmployees/EqualEmploymentOpportunityLaws/AtWillEmployment.aspx
http://www.calchamber.com/california-employment-law/pages/termination.aspx
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Sexual harassment suits may be filed against a business for any number of reasons. In fact, some employers are surprised to learn that sexual harassment charges have been filed against them because of suggestive posters, suggestive items on display in the workplace or because of lewd jokes told in the workplace. However, under California law, all of these are considered a violation of workplace rules.
Preventing sexual harassment in the workplace
Employers in California who have five or more employees are under an obligation per the laws in the state to provide a workplace where employees do not feel they are subjected to sexual harassment. It is important to note that there are two specific categories of harassment which are “quid pro quo” and “hostile work environment”. As an employer, you should be aware of what each of these terms means, specifically:
- Quid pro quo – when an employee feels they were denied opportunities for advancement or increase in pay because they refused a sexual advance on the job. In some cases, if an employee reports a sexual advance and were subsequently dismissed from their job this may also be considered quid pro quo.
- Hostile work environment – when other employees, regular visitors or others are telling offensive jokes regularly, an employee may feel the environment is hostile. Keep in mind this could mean racially insensitive jokes, jokes of a sexual nature or other behaviors an employee finds offensive.
According to the US Equal Employment Opportunity Commission, during 2011 there were more than 11,000 sexual harassment cases filed. More than 15% of these were filed by male employees. No employer, regardless of size is guaranteed to never have a suit filed against them. It is important to note, that of the more than 11,000 suits filed, settlements exceeded $52 million for suits that were found to have merit. It is imperative to verify that you have the right coverage to protect your business in the event you are sued for sexual harassment.
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Society is different than it was just a few decades ago. It has become contentious. Even a small accident that occurs, with seemingly no one at fault, can result in a large legal endeavor. When that happens, insurance companies enter the fray.
General Liability Insurance Defined
In short: General Liability Insurance is for most types of businesses where there may be instances of bodily harm, injury, and damages inside the business property that were caused due to owner or employee negligence. General liability insurance is dynamic coverage that includes anything from personal injury on the job to product misuse or malfunction.
This type of insurance is vital. Most savvy business owners and new business consultants will tell you that you don’t start a business without some form of general liability insurance. This type of coverage protects your from legal actions, such as suing, for occurrences that may or may not have been caused by you or an employee of your business.
Mitigating Liability Risks at Work
There are ways to mitigate these kinds of circumstances, however:
- Always ensure that quality and product control are handled to the highest standard by employees who are well trained and take their task seriously.
- Keep accurate data of all company records.
- Ensure that your employees are well trained and informed on all safety procedures and protocols that are necessary within the business.
- Never “sit on” an accident report that may result in a liability claim. Always ensure that you make all parties aware as soon as it happens.
However, those are only mitigating factors. You can never ensure or guarantee that something will not happen in the workplace which you and your business may be found liable. That’s why general liability insurance is so important. It is the “front line” of liability defense. While other types of coverages, such as cyber-security insurance and commercial property insurance, cover very specific terms, the general liability insurance has a wider umbrella of protection.
Source: http://sba.gov/blogs
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If you believe you don’t need Workers Compensation insurance, here’s a reality check:
Myth. I only have a few employees, or mostly part-time employees.
Reality: Workers Comp makes sense no matter how many employees you have. It helps cover medical expenses and lost wages for employees with job-related injuries and protects against lawsuits from injured workers if you’re found negligent. What’s more, some customers and clients may require you to carry it.
Myth: My employees won’t sue me.
Reality: Never say never. Injured workers might well sue to pay medical bills that could run into millions – not to mention pain and suffering or punitive damages. Workers Comp provides legal defenses that can slash your liability.
Myth: Workers Comp is too expensive. If one of my employees is injured, I’ll just pay out-of-pocket.
Reality: Weigh the cost of coverage against potential losses from an injury, especially if the employee sues. The longer a worker is off the job, the more it costs to cover lost wages and productivity. Severe injuries can take weeks or months to heal– or even lead to permanent impairment.
Myth: I provide a safe workplace. My employees won’t get injured.
Reality: Mistakes happen even in the “safest” workplace. Many companies post signs proclaiming the number of days without an injury on the job, but rarely do they read “365 days” Even the most minor mishaps can cause major damages.
Myth: Medical costs in the Workers Comp system are too high.
According to the National Council of Compensation Insurance, the medical cost inflation rate for Comp has been similar to that for Group Health insurance during the past several years. Legislation and regulations have led to the expansion of cost-containment programs.
To make sure you have this essential protection, at an affordable cost, just give us a call.
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