West Virginia Department of Commerce Selecting Your Insurance

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Selecting Your Insurance



Going Into Business in West Virginia
GOING INTO BUSINESS IN WEST VIRGNIA    

SELECTING YOUR INSURANCE

AT SOME POINT DURING THE FORMATION OF A BUSINESS, the question of insurance needs will arise. In fact, if you are writing a business plan, costs for this coverage will have to be addressed in your plan.

Sheree R. Curry, an award-winning business journalist and former staff reporter at Fortune Magazine and who specializes in management best practices, asks, “Are you prepared if disaster were to strike your business? More than 1 in 4 businesses will experience a significant crisis in a given year, according to a survey conducted by Continuity Insights magazine and KPMG Risk Advisory Services. Of those businesses that experience a disaster and have no emergency plan, 43 percent never reopen, according to The Hartford’s Guide to Emergency Preparedness Planning, published by The Hartford Financial Services Group, an investment and insurance company. Of those that do reopen, only 29 percent are still operating two years after opening.”

Ms. Curry has provided the following information:

A business crisis isn’t always fire, flood or hurricane; sometimes it’s simply having your computer systems knocked out for a period of time that can cause a significant loss in sales or a key employee that can suddenly no longer work and no one else knows his or her job.

Shopping For an Insurance Company
What are the Basic Kinds of Insurance?



Plan on It
So plan for the unplanned and test your plan. In this age of mobile technology, could your business be run from a backup location? Does more than one person know how to do a job or have permission to do important business functions like sign checks, make orders for supplies and pay employees?

Here’s just a few tips to consider:
  • Make duplicates of important communications materials. Keep copies of certain important materials at home: checks for business account, company letterhead, envelopes, important phone numbers and passwords.
  • Keep copies of important records in a remote location. Even though you keep important documents in a safe-deposit box, the bank, too, can be damaged by a disaster. “This type of record loss happens more frequently than people think, and reconstruction is a major inconvenience,” explains Connie Bracher, disaster chair for the California Society of Enrolled Agents and a tax preparer at Acorn Bookkeeping & Tax Service in Crestline, California. “Important documents should be copied and stored in another part of the country with a brother or sister, or in a safe-deposit box in another state.”
  • Run through a test drill of your disaster plan. As the poet Robert Burns wrote, “the best laid plans of mice and men go oft awry.” Don’t plan on using a communication system (handheld radios) to contact employees only to find they do not have the range necessary.
  • Prepare multiple contingency plans. If your primary plan depends on other locations or people being available during your disaster and they are also struck, you need to quickly come up with a Plan B.
  • Don’t skimp on insurance. Small companies tend to skimp on insurance coverage, especially when it comes to things like business income interruption insurance. If they do get insurance, they get the least amount they can. It is very cheap to buy additional coverage, but is extremely expensive to pay for ongoing expenses out of your pocket. Determine the kinds of risks you can do something about prepare for them as best you can.

Dare to Prepare
You’re ready to handle a disaster and save your business if you can answer yes to the following questions:
  • Have you identified the impact an outage would have on employees, customers and business interfaces?
  • Have you determined how long your company can afford to be inoperable before your business is critically affected should one or more of your services or operations experience disruption?
  • Have you developed, documented and tested a comprehensive business continuity plan for facilities, employees, processes, systems, data and networks that address recovery and restoration and internal communications, with other offices and customers?
  • Have you determined how your business will operate should key business partners and vendors be affected by a disruption or disaster?

The most innocent business owner can find himself or herself involved in legal actions against the business. In addition to liability, there are many other insurance considerations such as fire, flood, theft, auto, workers’ compensation, health, etc. that need to be considered. In addition to these concerns during the lifetime of the owner, considerations should be made for the untimely or unexpected death of the owner(s). There may be a need for life insurance and a buy-sell agreement to safeguard your heirs.

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SHOPPING FOR AN INSURANCE COMPANY

Shopping for an insurance company is like shopping for a bank. Careful research will help determine what company can best serve your needs.

Call your current personal insurance carrier to see what kinds of business insurance are offered. Check with independent agents who can shop various carriers for the coverage you need. If your needs are unique because of your type of business, look through trade journals. Many carriers of special types of insurance advertise in these journals to reach their target market. Some businesses require a special policy or carrier, such as farm businesses. A business based out of your home will not be covered by your homeowner’s policy. Check with your carrier before beginning operations.

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WHAT ARE THE BASIC KINDS
OF INSURANCE?

There are many types of insurance, more than any business could possibly afford or truly need. Most small businesses buy what is generally known as a Business Owner’s Policy (BOP). The policy generally includes property, liability and criminal coverage and various specialty needs of the business. The advantage to a BOP is that it usually costs less than if each type of coverage was purchased separately.

The following is a brief listing of categories or types of insurance that a company should consider for its individual needs.

Property and Liability Insurance
  • General liability
  • Surety bonds
  • Property damage liability
  • Boiler and machinery coverage
  • Fire
  • Product liability
  • Earthquake/Flood
  • Business interruption
  • Theft
  • Vehicle
  • Fidelity bonds (protects against employee dishonesty)

Umbrella
If you run a business of any kind-especially one that comes into contact with clients-then you should look into purchasing commercial or business umbrella insurance. This type of insurance is a secondary “excess liability” policy that protects business owners from lawsuits with settlements exceeding their usual insurance policies. Certain businesses are at higher risk of being sued for large amounts-bars, restaurants, sports arenas, large office buildings, and anywhere large amounts of people gather and may potentially be injured or otherwise harmed.

Sometimes accidents can happen in your businesses that are not directly your fault, but a court may decide that you are responsible for the financial damages. Your building may have a leak that results in personal injury to an employee or client, or one of your employees may give some bad advice that leads a client to sue.

Life Insurance

Health Insurance
Securing affordable health care is a challenge for most small business owners today. The West Virginia Small Business Plan works to enable eligible small businesses better access to health care plans at lower rates.

West Virginia Small Business Plan partners with health care providers and private insurance sector to reduce premiums.

Depending on the type of coverage chosen and employee profiles, uninsured small businesses could save up to 22 percent on health insurance.

Your company is eligible if it:
  • Has 2-50 employees.
  • Has been without company sponsored health insurance for at least the past 12 consecutive months.
  • Pays at least 50 percent of the cost of individual coverage.
  • Enrolls at least 75 percent of its eligible employees in the program.

An eligible employee does not have health insurance coverage through other means, such as a spouse’s policy. Individual health insurance is not company-sponsored, so employees with individual health coverage are eligible.

To find out more about the West Virginia Small Business Plan, call the SBDC business “Ask ME!” line at 888-982-7232 or visit the West Virginia Small Business Plan’s web site at www.wvsbp.org.

Mountain State businesses have other options as well. The National Association for the Self Employed (NASE) is a membership organization that provides its members with access to health and life insurance coverage. For details, call NASE at 800-649-6273 or visit www.nase.org

The American Small Office Home Office (SOHO) has partnered with Web-direct employee benefits broker Digital Insurance. For more information, visit the Digital Insurance product site www.myincompass.com.

Short and Long-term Disability

Employee Benefits

Insurance coverage is a complicated subject. For example, the U.S. Congress passed the Patient Protection and Affordable Care Act, known more commonly as HealthCare Reform Act. According to Wikipedia the Free Encyclopedia, the Patient Protection and Affordable Care Act provides for the phased introduction over four years of a comprehensive system of mandated health insurance with reforms designed to eliminate “some of the worst practices of the insurance companies.” The system preserves private insurance and private health care providers and provides more subsidies to enable the poor to buy insurance. However, at this time, the provisions of the act are under review and not in place.

For further information on the status of the Patient Protection and Affordable Care Act, go to the WV Insurance Commission web site, www.wvinsurance.gov and click on the Health Care Reform Act information link on the home page.

See your insurance professional to determine what is available and what would be best for your business and for you. It also would be wise to consult with your tax planner, especially in the area of life insurance.

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Going Into Business in West Virginia
Going Into Business in West Virginia
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