Utah Insurance Solutions appreciates the undertaking of a new venture, and knows it has its difficulties and pressures, but we make sure entrepreneurs don’t have to add insurance to that list of worries. Whether you know exactly what you need or you don’t know where to start, our team of experienced agents will help you buy your first business insurance policy with confidence. So increase your start-ups chances for success by ensuring you have the proper insurance coverage in place to protect your business.
Comprehensive general liability coverage insures a business against accidents and injury that might happen on its premises, as well as exposures related to its products.
For example, suppose a visiting customer slips on a banana peel while taking a tour of your office and breaks her ankle. General liability covers her claim against you. But let's say your company is a window-sash manufacturer, with hundreds of thousands of its window sashes installed in people's homes and businesses. If something goes wrong with them, general liability covers any claims related to the damage that results.
The catch is that the damage cannot be due to poor workmanship, and this points out one difficulty with general liability insurance: It tends to have a lot of exclusions. Make sure you understand exactly what your policy covers...and what it doesn't.
How much liability coverage do you need? Generally, experts say, $2 million to $3 million of liability insurance should be plenty. The good news is that liability insurance isn't priced on a dollar-for-dollar basis, so twice the coverage won't be twice the price.
The price you'll have to pay for comprehensive general liability insurance depends on the size of your business and the specific risks involved.
Property and casualty insurance provides coverage for losses due to the physical damage or destruction of your business. With the right policy, neither fire nor exploded boiler can put you out of business. Everything from your office building to your cabinets to your water cooler can be covered.
Make sure you get all-risks coverage. Then go the extra step and carefully review the policy's exclusions. All policies cover loss by fire, but what about such crises as hailstorms and explosions? Depending on your geographic location and the nature of your business, you may want to buy coverage for all these risks. Whenever possible, you should buy replacement cost insurance, which will pay you enough to replace your property at today's prices, regardless of the cost when you bought the items. It's protection from inflation.
Workers' compensation covers medical, rehabilitation costs, and lost wages for employees injured on the job, is required by law in all 50 states. Typically Workers’ comp insurance becomes applicable when you have three of more employees, but laws vary from state to state. Workers' comp insurance consists of two components, with a third optional element. The first part covers medical bills and lost wages for the injured employee; the second encompasses the employer's liability, which covers the business owner should the spouse or children of a worker who's permanently disabled or killed decide to sue. The third and optional element of workers' compensation insurance is employment practices liability, which insures against lawsuits arising from claims of sexual harassment, discrimination and the like.
Generally, rates for workers' comp insurance are set by the state, and you purchase insurance from a private insurer. The minimum amount you need is also governed by state law. When you buy workers' comp, be sure to choose a company licensed to write insurance in your state and approved by the insurance department or commissioner.
If you are purchasing insurance for the first time, the rate will be based on your payroll and the average cost of insurance in your industry. You'll pay that rate for a number of years, after which an experience rating will kick in, allowing you to renegotiate premiums. Workers Comp. insurance is generally very inexpensive, but costs vary by job classification (i.e. Workers Comp. for a Lumber Jack is going to be significantly more costly than purchasing Workers Comp. on an Software Engineer).
Depending on the state you are located in, the business owner will be either automatically included or excluded from coverage; if you want something different, you'll need to make special arrangements. While excluding yourself can save you several hundred dollars, this can be penny-wise and pound-foolish. Review your policy before choosing this option because in most states if you opt out, no health benefits will be paid for any job-related injury or illness by your standard health insurance provider.
Another way to cut costs is to ensure that all jobs in your company are properly classified. Insurance agencies give jobs different classification ratings depending on the degree of risk of injury.
When a hurricane or earthquake puts your business out of commission for days--or months--your property insurance has got it covered. But while property insurance pays for the cost of repairs or rebuilding, who pays for all the income you're losing while your business is unable to function?
For that, you'll need business interruption coverage. Many entrepreneurs neglect to consider this important type of coverage, which can provide enough to meet your overhead and other expenses during the time your business is out of commission. Premiums for these policies are based on your company's income.
Malpractice/Errors and Omissions Coverage (Utah Professional Liability Insurance)
Because of the nature of their work, professionals are involved in very sensitive areas of a client's business. Harm to those areas can cause significant loss. Imagine a computer consultant whose insertion of computer code crashes a client's network. As a result, malpractice insurance (for licensed professionals such as doctors, lawyers, architects and accountants) and errors and omissions insurance (for other service professionals) are highly recommended. Some states' laws do not permit professionals to hide behind their limited liability entities to escape personal liability for damages.
Cyber Liability Insurance in Utah
Just about any organization that uses technology to do business faces cyber risk. And as technology becomes more complex and sophisticated, so do the threats we face – which is why every business and organization needs to be prepared with cyber liability insurance. At Utah Insurance Solutions, we understand the complexity of cyber threats and have cyber liability policy that will help protect your business assets.
Utah Health Insurance
Health insurance, most of us have a good understand of the important role health insurance plays in our lives, but we hate the costs associated with having it! As a start-up you’re trying to keep your costs down and need a plan that will accomplish that. In most cases it’s cheaper to go with an individual health insurance plan for your family and partners vs. group insurance plan and/or Cobra insurance through a previous employer. Selecting an employers Cobra insurance plan will prove to be the most expensive method of providing health insurance.
With the Affordable Care Act (ACA) in full swing everyone now has access to “Guaranteed Issue” health insurance. What this means is regardless of your past or present medical conditions you can obtain coverage on a Guaranteed Issue basis. This means you can purchases the policy regardless of past medical history and there will be no “pre-existing conditions” clause. You may also find that you qualify for a “Tax-Credit” to help you cover your health insurance costs. In most cases health insurance costs will be your largest insurance expenses, so you must plan ahead. On average to purchase a basic level plan will cost $300 - $400, and family coverage on average can run from $700 - $1000, per month.
However, with the Affordable Care Act (ACA) there are only certain times you can enroll in a health plan unless you have a “Qualifying Life Event.” Losing your previous health insurance coverage from your employer is considered a Qualifying Life Event. You only have 60 days from the time you lose your health insurance coverage to purchase a new policy. The best thing a business owner can do is consult with an experienced health insurance broker to determine what options would be most appropriate for your unique situation.
Often times when starting a new venture life insurance is overlooked, this is because in most cases the individual had life insurance coverage through their previous employer. It’s critical to not overlook the important role life insurance plays in starting a new business venture. After all your family, your customers, and your business partners will be depending on you more than ever. And often times banks require a life insurance policy on the business owner before lending any money. Such policies typically take the form of term life insurance, purchased yearly, which covers the cost of the loan in the event of the borrower's death or disability.
Term insurance is less costly than permanent insurance at first, although the payments can increase each year depending upon the type of policy. Permanent insurance builds equity and should be considered once the business has more cash to spend. The life insurance policy should provide for the families of the owners and key management. If the owner dies, the creditors are likely to take everything, and the owner's family will be left without the income or assets of the business to rely on.
Key Man Insurance
Key man insurance pays out when an invaluable team member dies or, more commonly, becomes disabled. For many small businesses, the only truly indispensable person is the owner -- in which case it may merely duplicate individual life and disability policies. The exceptions include partnerships, for which these policies are often used to buy out a member or his heirs, and companies in which a particular employee possesses technical or highly specialized skills or knowledge that can't be easily replaced. When you buy it, buy enough to cover the cost of finding a replacement and maintaining support staff and facilities until the new person begins to earn his keep. Key man disability is separate from key man life and usually limited to a percentage of the person's income.
Buy Sell Agreement Life Insurance
A buy-sell agreement is a critical component to every business continuation plans. A good buy-sell agreement will address a series of important “what if” questions:
· What if an owner dies, what happens to the business?
· What if an owner becomes disabled?
· What if an owner suffers a serious illness?
· What if an owner suffers a divorce?
In the unfortunate event that a business owner, partner, or shareholder experiences any number of unforeseen events the buy-sell agreement ensures that the business will remain intact. Most buy-sell agreements are funded with life insurance which provides for immediate funds to buy out the owner's family or partners at fair market value. When determining your insurance needs to fund your buy-sell agreements or owner disability plans, be sure to consider any costs, expenses or liabilities related to your business and how they will be handled. Consult with an expert in business succession to have a discussion and advise you on establishing your plan.
It's every businessperson's worst nightmare--a serious accident or long-term illness that can lay you up for months, or even longer. Disability insurance, sometimes called "income insurance," can guarantee a fixed amount of income--usually 60 percent of your average earned income--while you're receiving treatment or are recuperating and unable to work. Because you are your business's most vital asset, many experts recommend buying disability insurance for yourself and key employees from day one.
There are two basic types of disability coverage: short term (anywhere from 12 weeks to a year) and long term (more than a year). An important element of disability coverage is the waiting period before benefits are paid. For short-term disability, the waiting period is generally seven to 14 days. For long-term disability, it can be anywhere from 30 days to a year. If being unable to work for a limited period of time would not seriously jeopardize your business, you can decrease your premiums by choosing a longer waiting period. Another optional add-on is "business overhead" insurance, which pays for ongoing business expenses, such as office rental, loan payments and employee salaries if the business owner is disabled and unable to generate income.
Utah Director’s and Officer’s Insurance
Many businesses struggle with the question of whether or not this type of policy is necessary, but to clarify the importance of this kind of policy, it protects small businesses who are being sued with frequency, keeping your assets and finances protected from the risk of losing them, especially if you are a publicly owned company, you borrow money, you have outside board members or shareholders, or are subject to government regulation.
Directors & Officers Liability Insurance is recommended for publicly traded and VC backed companies with a corporate board or advisory committee. Many investors and board members may refuse involvement unless this protection is in place.
No one ever said starting a new business would be easy, but when done right is always worth it! Start-ups will face a series of challenges in getting the business off the ground, and the fact of the matter is most business owners simply want to focus on those key tasks they do best. This is why it’s so important for a start-up company to surround itself with experienced professional advisors. Utah Insurance Solutions provides businesses and start-ups with a trusted network of experienced professional that specialize in helping business owners become successful at every phase of the business lifecycle.