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I n s u r a n c e

Learn about key insurance types required for small businesses, why insurance is crucial, and considerations for selecting policies and agents. Understand state and local requirements, liability insurance, worker’s compensation, and more.

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I n s u r a n c e

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  1. Insurance FOR A SMALLBUSINESS Updated:09-2016

  2. Welcome Agenda GroundRules Introductions INSURANCE‹#›

  3. Objectives • Identify the types of insurance required fora smallbusiness • Identify other types of insurance asmall business shouldconsider • Explain why insurance is important for asmall business INSURANCE‹#›

  4. What Do YouKnow? What do you know or want to learn aboutinsurance? INSURANCE‹#›

  5. Insurance for a SmallBusiness • Six keyareas • Insurance your business mayrequire • Other types toconsider • Reasons forinsurance • Location-relatedconsiderations • Selecting a policy,agency andagent • What to do after thepurchase INSURANCE‹#›

  6. Insurance Your Business MayRequire • State and LocalRequirements • Always check with federal, state, county andlocal governments • Medical insurancewith specific coveragemay • be required foremployees • Automotive insurance coverage for vehicles used in connectionwith thebusiness INSURANCE‹#›

  7. Other LiabilityInsurance • Professional LiabilityInsurance • May be requiredfor • Certain professionallicenses • Certificates of businessor professional business registrations • General LiabilityInsurance • Directors &officers • Liability laws change– • StayInformed INSURANCE‹#›

  8. Discussion Point#1: • Work-SpecificInsurance • Review examples of work-specific insurance whichare required by certainlicenses. • Here are a few tobegin: • Restaurant – foodbusiness insurance • Construction company –general • contractor’sliability • Auto repair shop –business general liability • Can you list other professionsthat requireinsurance? INSURANCE‹#›

  9. Worker’s CompensationInsurance • Protects against illnesses, injuries atwork. • Pays for rehabilitation,retraining • Addresses payments to beneficiaries and medical payoutlimits • Required by moststates, check statelaws • Private or stateadministered INSURANCE‹#›

  10. UnemploymentInsurance • Benefits those who are unemployed throughno fault of theirown. • Willing and able to work, activelysearching • Federally regulated, stateadministered • Check with state and Federal Dept. ofLabor • Always makepayments, avoidpenalties • and actions (lien, misdemeanor,felony) INSURANCE‹#›

  11. Other Types of Insurance toConsider • PropertyInsurance • Commercial – natural disaster andtheft • Equipment – coverage in commercialpolicy and repair and replacement ofparts • Inventory – suppliers shipments and instock Continued… INSURANCE‹#›

  12. Other Types of Insurance toConsider • Loss ofincome • Life • Disability • Medical INSURANCE‹#›

  13. Discussion Point#2: • RequiredInsurance • Review examples of required businessinsurance. • Is your business required by lawto carry any of these types ofinsurance? • Liability • Worker’sCompensation • Unemployment • Disability • Ifnot required, should it carry the insurance anyway?Why? INSURANCE‹#›

  14. Lender or Investor-Required Insurance When financing, a lender or investor mayrequire you show insuranceprotecting: • Business assets (building,property) • Cash flow – provision for interruptionof business (e.g., reconstruction,repairs) • In the event ofowner’s disability ordeath INSURANCE‹#›

  15. Activity 3: “Key Person”Policy Think about and respond to these discussionpoints. Doyouhavealistthenameswhocould run your business or that you would trust to do so, if you were ill for an extended period oftime? List who would take over yourbusiness in the event of yourdeath. Doyouhaveaplanforyourbusinessin the event of yourdeath? Isthereafamilymemberortrustee named to liquidate theassets? Continued… INSURANCE‹#›

  16. Activity 3: “Key Person”Policy Think about and respond to these discussionpoints. What about employeeownership? Would selling to the employeesprovide income to a spouse not involved in the business? Do you have lifeinsurance to cover all liabilities of thebusiness? INSURANCE‹#›

  17. SuretyBonds • A surety bond is issued by a third party, known asa surety, as a guarantee the second party will fulfillits obligations or meet certain laws. If the second party fails to do this, the bond covers thedamages. • Required for some licenses or permits (e.g.,car dealer, constructioncontractor) • Protection for consumersand forgovernment • “Bid bond” may be required to submit a bid to the government INSURANCE‹#›

  18. Reasons forInsurance • Why is it importantto haveinsurance? • Manage the risks involved inbusiness • Protection of assets – cash orproperty • Protection from loss ofincome • Maintain continuedfinancing • Protection from injuries and damages • received orinflicted Continued… INSURANCE‹#›

  19. Reasons forInsurance • Why is it importantto haveinsurance? • Legal and regulatoryrequirements • Retention ofemployees • Business continuity – recovery from disasters, systems continuations, maintains cashflow • Protection fromerrors INSURANCE‹#›

  20. Location-RelatedConsiderations • Business location affects type ofpolicy • Home-based – Add-on tohomeowner’s orseparate • Warning: Your traditional homeowner’s insurance may NOT cover damage causedby your home-based smallbusiness! • Retail – one or more locations, inventory theft, credit card theft, personal vehicle fordeliveries Continued… INSURANCE‹#›

  21. Location-RelatedConsiderations • Business location affects type ofpolicy • Commercial – greater coverage thanRetail, largerbusinesses • Vendor – kiosks at festivals, conferences,full- time or shorterperiods INSURANCE‹#›

  22. Selecting aPolicy • Weigh the costs to insure therisk • Does itmakesense? Could you coverit withoutinsurance? • Consider policy costs with deductiblesand coveragelimits • Is the coveragesufficient? • Does the policy providefor growth? • Are there timeconstraints on modifyingcoverage? INSURANCE‹#›

  23. Selecting a Company and an Agent Compare quotes, coverage, deductiblesand otherdetails • Stable andaccessible? • Check consumerand business reviews, network withothers Know what’s notcovered! INSURANCE‹#›

  24. What to Do After thePurchase • Keep policies easilyaccessible • Keep phone numbers readilyavailable • Maintain insurance-related proceduresin business continuityplan • Reviewpolicies periodically • Meet with agentfrom time-to-time Continued… INSURANCE‹#›

  25. What to Do After thePurchase • Financing no longer needed?Make beneficiarychanges • Handle credit responsibly –premiums are affected by credit worthiness • Get credit orrefund forcancellations • File complaints with state insurance department or commissioner ifneeded INSURANCE‹#›

  26. Assuming Risk is Part of DoingBusiness Going outside is a risk, but so isstaying in. Going out may require boots, coat, or anumbrella for protection, but staying in can result in missed opportunities. Business insuranceeases the burden of risks, so owners can “go out”to… focus on businessgrowth. INSURANCE‹#›

  27. Key Points toRemember • Check federal, state, county and local lawsfor insurancerequirements • Paying Unemployment Insurance and Worker’s Compensation premiums on time will keepyour business reputationintact • Professional licensing may requireadditional insurance or suretybonds • Lenders and investors requireinsurance protection from risks involvedwith • doingbusiness • Continued… INSURANCE‹#›

  28. Key Points toRemember • Insurance • Minimizes the impact risks can have on yourability to continueoperations • Impacts continuedfinancing • Helps retainemployees • Provides protection fromliabilities • Your location, facilities, autos and type ofbusiness operations determines insuranceneeds Continued… INSURANCE‹#›

  29. Key Points toRemember • Evaluate your risks, ask questions,compare policies andagencies • Keep accurate records forclaims • Keep emergency contact information inan accessibleplace • Update beneficiaries, obtain releases andmaintain adequatecoverage INSURANCE‹#›

  30. Summary • What final questions do youhave? • What have youlearned? • How would you evaluate thetraining? INSURANCE‹#›

  31. Conclusion • You learnedabout: • Small business insurance requirementsfor professional licensing, unemployment and worker’scompensation • Insurance required for the protection of lenders andinvestors • Other types of insurance to lessen risks of disaster, liability, loss of income, injuriesand death Continued… INSURANCE‹#›

  32. Conclusion • You learnedabout: • The importance of insurance for yourbusiness • Differences in insurance policies forvarious types of facilities andlocations • Comparing policies, agents andproviders • What to do before you buy, while you havethe policy and after thepurchase INSURANCE‹#›

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