Insurance is one of the big headaches every small business owner must face. You don’t want to have too much, but you surely want to have enough. But just how much is enough?
According to recent research by the National Association of Insurance Commissioners (NAIC), many small businesses are exposed to serious risks that could be mitigated by a better understanding of their insurance options. Are you one of these people?
Key findings of the NAIC research revealed:
- Only 59 percent of small businesses with fewer than 20 employees have workers’ compensation insurance, which state law requires for most companies. Workers’ compensation insurance protects business owners from claims by employees who experience a work-related injury or illness.
- Only 35 percent of small businesses have business interruption insurance, which covers expenses like payroll and utility bills that often continue after a major event (e.g., a fire or storm) shuts down a company. Because rebounding from a disaster can take a considerable amount of time, small businesses need to understand this risk and the available insurance options.
- While 71 percent of small businesses say they are very dependent on one or two key people for their success and viability, only 22 percent have Key Person life insurance, a type of policy that enables a business to weather the death of a key employee or buy out the key person’s heirs if ownership rights are involved.
- Among home-based businesses – 22 percent of the NAIC survey – 48 percent depend on their homeowners insurance to protect their businesses. However, most homeowners insurance policies severely limit coverage of business property and may totally exclude business-related liability claims.
Take a look at Insure U for Small Business, an online public education program that provides tips on six categories of vital information to small businesses: workers’ compensation; group health and disability; business property and liability; commercial auto; group life and key person life; and home-based business insurance.
And here’s a new resource designed to help you evaluate insurance coverages courtesy of Assurant Employee Benefits’ Small Business Center. The insurance analyzer provides valuable information for small business owners in the process of reviewing or purchasing employee benefits and business insurance.
“This latest enhancement to the Small Business Center has been created as an online “Insurance 101” resource for small businesses,” said Joe Sevcik, vice president of marketing at Assurant Employee Benefits. “The tools and features it includes can help employers determine whether their current insurance coverage is adequate and also provide information about additional protection they might consider.”
In addition to explaining the types of business insurance and employee benefits available in the marketplace, the insurance analyzer offers the following:
- A short quiz for business owners to help determine their insurance needs. Recommendations on coverages to consider are provided based on the answers given.
- A financial stability pyramid to help businesses determine whether their benefits budgets are being allocated appropriately.
- Tips on selecting an insurance agent or broker that understands the particular needs of a smaller business.
“As a provider of non-medical employee benefits focused on smaller businesses, we are committed to helping employers identify the insurance products that best meet their needs,” said Sevcik. “The insurance analyzer is an additional resource for businesses in that growing market segment.”