The rising costs of health care aren’t just a problem for individuals—they’ve also impacted businesses that make health benefits a priority for their employees.
Small businesses have been particularly vulnerable. Over the last 15 years, the cost to cover one employee under group health insurance rose nearly 200 percent—from $2,196 to $6,435.
These unsustainable costs, coupled with the hassle and one-size-fits-all nature of traditional group benefits, have caused many small businesses to drop health benefits. As we've covered previously, this is a losing strategy for 2020. For the foreseeable future, small businesses will face a competitive war for talent in which health benefits are vital if these businesses are going to succeed.
Fortunately, there are more small business health benefits options today than ever before such as:
We’ll go over how they work, what advantages they offer, and what disadvantages a business might have to contend with should it choose these options. We'll also discuss some regulatory changes in the works that may make new health benefit options available in the near future.
Option 1: Individual Coverage HRA (ICHRA)
Starting this year, two new HRAs are available to business owners: the individual coverage HRA (ICHRA) and the excepted benefit HRA.
The ICHRA works well for employers of all sizes, specifically because they are not restricted based on employee count like the QSEHRA (below).
The ICHRA works much like the QSEHRA, but it doesn't have contribution limits, and businesses can offer different allowance amounts based on 11 employee classes. Additionally, the ICHRA is only available to employees enrolled in individual health insurance; employees enrolled in a spouse's group health insurance policy can't participate.
Option 2: The qualified small employer HRA (QSEHRA)
An increasingly popular option, the qualified small employer health reimbursement arrangement (QSEHRA) was created through bipartisan legislation in December 2016.
With the QSEHRA, much like other health reimbursement arrangements (HRAs), businesses with fewer than 50 employees offer employees a monthly allowance of tax-free money. Employees then enroll in an individual health insurance policy, and the business reimburses them up to their allowance amount. In addition, employees can use the QSEHRA to get reimbursements for eligible out-of-pocket expenses. This allows businesses to keep control over their budget while offering a meaningful benefit to their employees.
With the QSEHRA, all reimbursements are free of payroll tax for the business and its employees.
Reimbursements can be free of income tax for employees if the employee is covered by a policy providing minimum essential coverage (MEC).
The QSEHRA is often the best choice for small businesses because it allows for complete personalization. Employees can purchase what best fits their needs, while small businesses are free to set their own budget.
The QSEHRA also offers value to small businesses in unique situations, such as those with employees working in multiple states, those with employees who are covered under a spouse’s group policy, and even those with employees without insurance.
Option 3: Group coverage HRAs
Because of their lower cost, high deductible health plans (HDHPs) are the most frequently offered group health policy. However, there’s a reason they’re less expensive: they cover less than other policies.
To mitigate some of that loss, small businesses can offer a group coverage health reimbursement arrangement.
With a group coverage HRA, the business offers employees a monthly allowance of tax-free money in addition to the group policy. Employees then choose and pay for health care and the business reimburses them up to their allowance amount.
Generally, employees use the HRA to cover expenses like copays, deductibles, and prescription drugs. Most items listed in IRS Publication 502 are available for reimbursement, but the business can limit this list if it chooses.
Reimbursements made through the HRA are free of payroll tax to both the business and its employees. They’re also free of income tax for employees.
Businesses can structure their own employee eligibility requirements as long as employees participate in the group policy.
With a group coverage HRA, businesses and their employees receive some of the personalization they'd get with a QSEHRA. However, these HRAs must be attached to a group policy, which is still expensive and can be tiresome to administer.
Option 4: Traditional group health insurance
The traditional choice of most businesses, a group health insurance policy is a plan chosen by the business that provides coverage to employees and, potentially, employees’ dependents.
Small businesses offering group health insurance pay a fixed premium for the policy, though they may pass on a portion of the premium cost to employees. Employees are responsible for copays and deductibles associated with the services they seek.
Businesses typically purchase coverage through an insurance broker or the public Small Business Health Options (SHOP) marketplaces.
Traditional group health insurance can be a good choice for small businesses because it's relatively easy to obtain and most employees are already familiar with how it works.
However, premium prices can be a challenge. The cost of traditional group health insurance is estimated to reach $15,375 per employee family in 2020 for businesses with fewer than 500 employees. This is simply out of reach for most small businesses.
Option 5: Self-funded health insurance
To avoid the expensive premiums and restrictions of group health insurance, some small businesses choose to self-insure. With a self-insurance arrangement, the business assumes the financial risk for providing health care benefits to employees. This means that rather than paying a fixed premium to an insurer, the business pays for each employee out-of-pocket claim as it arises.
Terms of eligibility and covered benefits are outlined in formal plan documents. Typically, the business sets up a trust fund to earmark money, contributed by both the business and its employees, to pay these claims. Businesses may also pair the fund with a stop-loss policy that limits the businesses’ potential risk.
Small businesses can save money with self-funded health insurance, particularly in administrative costs. Cost savings in non-claims expenses compared to group health insurance can range from 10 percent to 25 percent.
However, self-insurance is risky and larger than expected claims could put a small business out of business. For this reason, self-funded health insurance is more common among larger businesses. In fact, the average size of a self-funded business is 300 to 400 employees.
If you are a small business in need of health benefits for your employees or need some guidance on what the best direction is, give the team at USA Mutual Insurance a call at 718-285-6500 or click here to send us a message.
As a small-business owner, you’re responsible for two families: the one you have at home, and the one you have through work. No matter what your business, a well-conceived insurance and benefits program is essential. If you die or become disabled, insurance can help protect your family and your business. To get a sense of how well you’ve planned for these responsibilities, ask yourself these questions:
One of the first things any business owner needs to consider is how to protect against events that may threaten the future of the business, like the death or disability of a proprietor, partner or key employee.
A good benefits program is essential for attracting new employees and retaining current ones. Surveys show that three in four workers consider benefits a decisive factor in weighing new job opportunities. Benefits like health and disability insurance and retirement plans are very desirable to employees, but they can also be costly to employers. That’s why many employers share the costs with their employees. There are also voluntary benefit programs that allow employees to purchase or increase their benefits themselves, often through automatic payroll deduction. An insurance professional at USA Mutual Insurance can help you select the right mix of benefits and guide you through the various plan options.
Executive benefits help you offer your best employees a higher level of benefits and compensation, along with significant tax advantages. They also compensate for the fact that most 401(k) programs restrict the ability of executives to accumulate enough money on a tax-favored basis to fund the retirement lifestyle they desire.
The bottom line here is if you are interested in starting a business or are already in business, it's important to take notice of how important insurance is to your business.
If you would like to see how USA Mutual Insurance can help your business with it's insurance needs, click here to make an appointment to speak to one of our insurance professionals.
Turning 65 brings access to senior discounts galore, but there is no benefit of senior citizenship quite like Medicare.
The federal program extends subsidized medical insurance primarily to folks age 65 and older. But, while Medicare coverage comes with numerous freebies, it is hardly free.
Medicare beneficiaries pay into the system via taxes withheld from their paychecks during their working years. Additionally, Medicare coverage is not all-inclusive: Beneficiaries must cover all or part of certain medical expenses.
If you are already on Medicare, you already know that — perhaps painfully well. But the costs associated with coverage can come as a surprise to folks who have yet to sign up for Medicare.
Below is a look at 3 of the most expensive, most common and most surprising health care costs that Medicare does not cover.
You may be surprised to find that even federally subsidized health insurance has premiums.
For 2019, the standard monthly premium for Part B — the component of Medicare plans that covers services you receive outside of a hospital — is $135.50 or more, depending on your income. Usually, the Part B premium is deducted from your Social Security benefits check.
Seniors with Medicare Advantage usually pay a premium for their plan in addition to the standard Part B premium.
One bit of good news: A vast majority of seniors do not pay a premium for Medicare Part A, which covers inpatient hospital services, as we reported in “3 Major Medicare Costs That Will Increase in 2019.”
How to lower your costs: The Part B premiums are fixed. There’s nothing you can do about them.
If you have Original Medicare, you have the option to buy a supplemental insurance plan, also known as a Medigap plan, which would pay for some expenses that Original Medicare does not cover.
The catch: The Part B premium isn’t among the costs that Medigap plans cover. So, you will still have to pay it — plus the premium for the supplemental plan.
2. Long-term care
Long-term care refers to medical and nonmedical services for people who are unable to perform basic daily tasks like dressing or bathing on their own. You may receive long-term care in your home, in the community or at an assisted living facility or nursing home. Like most health insurance plans, Medicare generally does not cover long-term care costs, which are notoriously high.
In 2018, the national median cost of a full-time home health aide was $4,195 per month, according to Genworth, a company that provides long-term care insurance. The median monthly cost for a private room was $4,000 at an assisted living facility and $8,365 at a nursing home.
3. Dental care
Some Medicare Advantage plans may cover some dental services. It depends on the specifics of the plan.
Original Medicare does not cover most dental care, procedures or supplies — including:
There are some exceptions. For example, Original Medicare covers certain dental services that you get while in a hospital. But aside from exceptions, seniors on Original Medicare plans are stuck paying for 100% of their dental expenses.
With the high cost of health care after retirement and the unexpected expenses that may come while on Medicare, it's best take out an additional policy to help cover those additional unexpected costs.
Click here to speak with an insurance professional to see how we can help with post retirements health coverage.
Source: MSN Money
When you're preparing for retirement, healthcare expenses are probably one of the last things on your mind. But retirees can end up spending tens (or even hundreds) of thousands of dollars on healthcare alone during their golden years, making it one of the most crucial costs to prepare for.
The average retiree spends around $4,300 per year on out-of-pocket healthcare costs, according to a study from the Center for Retirement Research at Boston College, and that doesn't include long-term care. Medicare will help cover some costs, but coverage is far from free, and you'll still face some out-of-pocket expenses.
Health insurance in retirement is widely misunderstood, which can be an expensive problem. Seventy-two percent of adults over the age of 50 admit they don't fully understand how Medicare works, a survey from the Nationwide Retirement Institute found, and more than half believe that coverage is free. In order to avoid any pricey surprises, it's important to understand which costs you're responsible for, what your insurance will cover, and how much coverage will cost.
What's the magic number for retirement?: $1.7 million, according to this study
Your health insurance options in retirement
Once you turn 65 years old, you become eligible for Medicare – but enrolling in coverage isn't as simple as it may seem. There are different types of Medicare coverage available, depending on your specific healthcare needs.
Original Medicare includes Part A and Part B coverage. Part A covers trips to the hospital and other types of emergency care, while Part B covers doctor visits and some other preventative services. Prescription drug coverage isn't covered within Parts A or B, so you'll need to enroll in separate Part D coverage for help with this type of care.
Also, routine care – such as dental and vision care – isn't typically covered under Original Medicare, so you'll need to foot the bill for those costs. Keep in mind that if you have a dental or vision emergency, Medicare typically will cover those expenses. But for routine teeth cleanings, eye exams, etc., those will need to be paid for out-of-pocket.
For more expansive care, you can instead opt for a Medicare Advantage plan. These plans are similar to the type of insurance you likely have through an employer, in that they typically cover everything from hospital visits to prescription drugs to routine care. The downside, then, is that this type of coverage is often more expensive than Original Medicare.
The costs of healthcare coverage
No matter which type of coverage you choose, you'll still be responsible for all premiums, deductibles, copayments, and coinsurance. For the lowest monthly payment, you can choose to go with Original Medicare – but you'll face higher out-of-pocket expenses. With an Advantage plan, you'll likely have higher premiums, but greater coverage and fewer out-of-pocket costs.
Most people won't pay a premium for Part A coverage as long as you've paid Medicare taxes for at least 10 years, but you will have a deductible of $1,364 per benefit period – which begins when you're admitted to a hospital and ends 60 days after you leave the hospital. Then with Part B coverage, the standard premium is $135.50 per month, but it may be higher depending on your income. Part B also has a deductible, though it's just $185 per year.
If you also enroll in Part D coverage, that will be an additional cost. This type of insurance is offered through private, Medicare-approved providers, so prices will vary based on your individual plan, but the maximum deductible for 2019 is $415 per year.
Medicare Advantage plans are also offered through third-party insurance companies, so rates can vary widely based on your location, the provider, and the amount of coverage you're receiving. But you'll typically still have to pay a premium, usually along with the standard Part B premium as well.
Because prices differ based on the plan, be sure to shop around for the best rates if you choose an Advantage plan. Some plans offer low or even $0 premiums, but you may be stuck with a high deductible or less-than-ideal coverage. Or other plans may charge higher premiums, but you might have more coverage and a lower out-of-pocket maximum. Consider what your healthcare needs may look like in retirement, then choose the option that will provide the most bang for your buck.
Health insurance can be confusing, particularly in retirement. Medicare can be a lifesaver, but choose the wrong type of plan for your needs, and you could end up paying thousands more than you need to. Do your homework beforehand about your insurance options and what they'll cost, though, and you'll ensure you're as prepared as possible for these expenses in retirement.
If you would like to be better prepared in your retirement when it comes to health insurance coverage, click here to contact the insurance professionals at USA Mutual Insurance.
If you're planning a home renovation, you may want to call your insurance agent first because this decision can impact your homeowners insurance. Some home renovations will change the amount of coverage you need, while others could even help you qualify for a discount. We cover six common scenarios that could affect your insurance, so you can plan ahead.
1. Building a New Addition
When you expand and improve your home, you could likely increase its replacement value. This is the cost to repair or rebuild your home. Some additions that could increase your replacement value include: adding a second-story bedroom, expanding the living room or building a new garage.
After building a new addition, or making updates or other improvements, you may need to increase your coverage because the value of your home, and the cost to rebuild it will likely have increased. Most insurance companies require your Coverage A or dwelling coverage limit be at least 80 percent of the replacement value of your home.
Your insurance agent can recalculate your home value to determine whether you'll need more coverage because of the addition or improvement.
2. Building a Pool
If you're looking to add a pool, you will want to contact your insurance agent to review coverage for changes to your property's value, as well as any increase in risk. When people are swimming and running around the pool, there's the chance for an accident. If someone gets hurt, they could try to hold you responsible for damages. This can apply even if the accident isn't your fault.
Check with your agent to see whether your existing policy covers a pool and if you need to increase your liability coverage. This coverage can help pay damages to injured persons and provide for a defense if you are sued as a result of their injuries.
You should also ask your agent what steps you can take to keep your pool safe so you can avoid accidents. Adding a fence with a lock is a smart move. You could also add lights with motion sensors or a pool alarm to discourage trespassers. Consider skipping the diving board, because this increases the chance of an accident and your insurance cost.
Travelers wants to help you protect the things that matter to you. We offer a wide breadth of products so you can be covered at home and on the road.
3. Adding a Deck
A new deck is another improvement that can add value but also risk, especially if the deck is attached to a second story or higher. You should let your agent know that you've added a deck, so he or she can adjust your policy as necessary.
4. Renovating the Kitchen
Upgrading the kitchen can significantly increase the value of your home, especially if you switch to higher-quality counter tops, appliances and new flooring. You should contact your agent to see if you need to increase your insurance coverage.
If your contractor upgrades the plumbing or electrical wiring as part of the renovation, ask your homeowners insurance agent if you qualify for a discount or if your coverage needs to be adjusted. These upgrades can reduce the chance of flooding water damage and fire, so check if your insurance company has discounts that can help to reduce your premium.
5. Finishing the Basement
Finishing your basement can also increase the value of your home. That means, yet again, you may need more homeowners coverage. Flooding can be a concern, especially for the lowest floor in your house. It is important to note that most homeowners insurance policies do not cover damage caused by floods. Ask your agent to review your coverage and look to see if there are steps you can take to help prevent future damage, like installing a sump pump.
6. Redoing the Roof
Before you redo your roof, ask your insurance agent whether this could qualify for a discount. Some companies offer a discount when you reinforce the roof or use stronger roofing materials that are wind, hail and leak-resistant. Your agent can explain how to qualify. At the same time, redoing the roof could increase your property value, which means you might need more coverage.
It is a good idea to contact your agent when you’re considering making home renovations. Their knowledge and expertise can help you get the most out of your discounts while making sure your home is adequately insured.
Are you making any home improvements this year? Don't forget to contact your agent to see how these revocations may affect your homeowners insurance policy. If you are not sure, click here to speak with one of our insurance professionals.
You've probably been told time and time again that you should have a life insurance policy, but if you're like many clients, you've been putting it off due to one key factor: money. It's true that life insurance isn't always cheap, but there are steps you can take to make it more affordable. Here are a few to begin with.
1. Get a term policy
You have two primary options for buying life insurance: permanent life insurance and term life insurance. With the former, you're covered forever, and your policy accumulates a cash value that can serve as an income source for you when you need it. With the latter, you're only covered for a specific period of time (hence the name "term"), and once your policy runs out, you get nothing. You also don't accumulate a cash value with a term life policy. That said, term life insurance is generally a lot cheaper than permanent insurance, since you forgo the benefit of cash value and indefinite coverage, so if cost is a concern, it pays to look into term policies.
2. Apply when you're relatively young
The younger you are when you apply for life insurance, the lower a premium rate you'll generally snag. Many people put off life insurance until their 40s or 50s because they don't want to start making premium payments earlier on. But by waiting that long, you risk getting slapped with a prohibitively high premium instead.
3. Get healthier
The healthier you are, the easier it becomes to snag an affordable premium rate on a life insurance policy. Therefore, if you work on improving the picture of your health, you could save a bundle. If you're overweight, aim to shed enough pounds to get into a healthy range. If you're underweight, do the opposite, because you will be penalized any time your weight lands in what's considered an unhealthy range. And of course, if you're a smoker, kick the habit - incidentally, it'll save you money, too.
4. Buy only the coverage you need
You'll pay more for a life insurance policy with a $2 million death benefit than you will for a policy that pays a $500,000 death benefit. If you want to keep your premiums manageable, don't overbuy coverage.
How should you calculate your coverage level? A good way to start is to establish a benefit that's a certain multiple of your income - say, 5 or 10 times that sum. Next, evaluate your outstanding debt, like your mortgage, and aim for enough coverage to pay it off. From there, think about financial goals you have for your family, and include enough money to pay for them (putting kids through college, for example). Finally, make sure there's enough money in your death benefit to cover your funeral costs.
Let's say you earn $60,000 a year and want five times that amount as a basic death benefit for a total of $300,000. Let's also assume you want to include enough money to pay off your $100,000 mortgage, you want another $100,000 to put your child through college, and another $10,000 to ensure that your funeral is taken care of. That means you're looking at a death benefit of $510,000. If that's the case, don't buy a policy with a $1 million payout - you don't need it.
You don't need to be rich to get life insurance; you just need people in your life who stand to suffer financially in the event of your passing. If those people exist, then do some research and aim to find an affordable policy that gives your loved ones - and you - the peace of mind you all deserve.
The team at USA Mutual Insurance is here to help you choose the best Life Insurance coverage. Click here to speak with one of our insurance professionals to start saving on your Life Insurance coverage or to start a new policy.
Summer’s here! Barbecues. Burgers and beer. It's a good time to review your insurance coverage. If an out-of-control cookout cooks your castle, are you prepared?
People commonly see insurance as a once-and-done purchase. Renters buy policies to meet landlord requirements, auto-renew and forget it. Income stretched homeowners often buy bare-bones policies to satisfy the bank while minimizing premiums. But “required” is often inadequate.
Old coverage may not suffice now. Have you updated your policy to cover the increased worth of your possessions?
Renters’ insurance covers either depreciated cash value or replacement cost, which is pricier coverage. Depreciated value means that if you bought your sofa 10 years ago, you would get reimbursed for its current value. Replacement cost means that you would get money for a new sofa.
Natural disasters happen
If you’re outside California, don’t think you’re earthquake safe. Quakes span much of the west. Similarly, flood insurance is an obvious buy for folks along the Gulf Coast, eastern seaboard and major rivers. But according to FEMA, low-risk areas generate over 20% of National Flood Insurance Program claims – and about one-third of flood-related federal disaster assistance.
In 2017, the average paid flood insurance claim was about $92,000, according to the Insurance Information Institute and FEMA.. Could you handle that? Flood risks can change, too, from changed community development.
Even in disaster-free areas, you may be unprepared for the worst. Most policies cover damage from hail, fire, wind and tornadoes. But basic policies exclude most mold. Some insurers offer extra mold riders. But it costs a bit more. So does extending coverage for sewer backups. Many skip these riders. If you're ankle-deep in sewage, the last thing you want to hear is it isn’t covered.
Homeowners insurance includes lawsuit coverage. But it’s usually bare-bones. If someone suffers a catastrophic injury on your property, you can be liable for their lost income, medical bills, personal damages and trumped up trauma.
You're sued and ...
Most critically, make sure you’re protected from personal liability. Homeowners insurance includes lawsuit coverage. But it’s usually bare-bones. If someone suffers a catastrophic injury on your property, you can be liable for their lost income, medical bills, personal damages and trumped up trauma. Costs can mushroom, exhausting your coverage – leaving you stuck for big bucks.
Umbrella policies can protect you, adding a million dollars, even more, in extra liability coverage – protecting you from having to sell your home or other assets.
Homeowners’ policies usually provide liability protection up to $100,000. If an injured guest sues you for $350,000 in medical bills, lost wages and more, you could be in trouble. A middle-class family’s umbrella policies should roughly equal their net worth., Ultimately how much insurance you buy comes down to how much risk you readily endure.
After reading this, do you still think you have enough insurance? Click here to contact us to find out how we can help fill any gaps or help you evaluate if you do or don't have enough insurance.
If you are a business owner, you know a thing or two about taking risks. Your entrepreneurial spirit is not only commendable, it’s critical to keeping our economy going. But at the same time, it’s smart business to limit your risks however and wherever you can. That’s where business insurance—and solid advice from USA Mutual Insurance come into play.
Is business insurance necessary?
The short answer is absolutely. Especially if you have employees, in which case some types of insurance, including workers’ compensation and disability insurance, may be required by law. You may also be required to have insurance if you have a company car. In other instances, insurance coverage can be a stipulation of getting a business loan, lease, supplier or customer contract or a state or local business license.
In many cases, though, there are no laws, rules or regulations that mandate business owners make smart choices about protecting their business. As a result, around 40% of small businesses don’t have insurance.
What’s the risk?
Many small businesses go without insurance because of the cost. But those businesses haven’t carefully considered what not having insurance could cost them. The reality is, all businesses face risks that could be financially devastating without insurance protection. Obviously if you’re opening a skydiving school, your business risks are going to be a lot more substantial than if you’re opening up a bookstore. But no business is entirely immune to risks, which could include:
Tips for protecting your business
If you don’t want all the hard work that goes into starting a business to be in vain, make sure your business is covered. Keeping these tips in mind can help you secure the right insurance for your company:
1. Make the right call.
Trying to understand your insurance needs and which coverage are the right fit can be overwhelming, if not downright impossible, to do on your own. So don’t go it alone. Call your independent insurance agent. Independent insurance agents are not only well-versed in the types of risks businesses face, they also know the types of insurance products available to protect businesses, and they represent multiple insurance companies, which means they have access to a wide range of products to choose from.. An independent agent can help you carefully consider and identify potential risks to the business and fully explore your insurance options, so that coverage can be matched to your unique needs. Essentially, working with an agent ensures you get the expert help and advice you need to make sure your business is covered, no matter what happens.
2. Plan on it.
Create a detailed business plan that outlines what the business will do and how it will do it. A solid business plan is a crucial tool when it comes to securing insurance as well as funding for a new business. A plan demonstrates to insurance underwriters and potential investors that you’ve done your due diligence to consider the risks you may encounter and how to protect your business as it grows. Your independent agent can help you create a good plan and pitch it to insurance underwriters.
3. Know your risks.
There are many, many types of commercial insurance products on the market, ranging from general liability insurance, to property coverage, to commercial automobile coverage, to data breach and e-commerce coverage. Knowing what protection you need starts with understanding the unique risks your business faces. For example, if you’re starting a contracting business or a manufacturing company, equipment breakdown or electrical failure could seriously jeopardize your livelihood. On the other hand, if you’re launching an e-commerce site, protection against data compromise is probably a must. An independent agent can help you identify your potential liabilities and risks via a professional risk assessment so you know what types of coverage you need.
4. Consider a package deal.
If your business requires a number of different types of coverage—such as property coverage, vehicle coverage, protection from business interruptions or loss of equipment and liability coverage—you may want to consider a Business Owner’s Policy (BOP). A BOP bundles different types of coverage together and can save you money versus buying separate policies for your various insurance needs.
5. Make it personal.
Your business is unique, and that means your insurance coverage should be too. Even if a BOP makes sense for you, you should talk to your independent agent about customizing the coverage so you have added protection where you need it most. Your agent can help you look at adding endorsements or other options to your coverage based on your business’s specific needs and risks. Keep in mind that independent agents typically have access to a multiple carriers, so they’re very well equipped to deliver the customized insurance options you need.
6. Make no mistake.
Owners of home-based and small businesses frequently make two common insurance mistakes. First, home-based business owners often assume their homeowner’s policy covers business assets. But in most cases, you need a separate commercial policy to safeguard business property and protect your business from liability. Second, owners who have incorporated or formed an LLC may think their business structure protects them. While a formal business structure may protect your personal assets, it won’t cover business losses.
7. Don’t overdo it.
While protecting your business with insurance is no doubt a smart investment, no owner wants to pay for coverage he or she doesn’t need. Working closely with your independent agent and ensuring he or she truly understands your business can help prevent buying unnecessary coverage. You can also save money by choosing a higher deductible and following your insurer’s recommendations for avoiding loss.
8. Take a second look.
As your business evolves, so will your risks. It’s a good idea to review your insurance policies with your independent agent at least two times each year to identify new risks and ensure you have the coverage you need to protect your company and your livelihood for the long term.
If you are a small business owner and would like to explore who to protect your business with insurance, click here to speak with one of our insurance professionals.
Insurance policies typically come with a deductible -- an amount you must pay before your coverage kicks in. For example, if you have a $500 deductible on your homeowners insurance and a tree falls on your house requiring repairs, you'd pay $500 of the cost, and the insurer would pay any additional expenses for covered repairs up to policy limits.
With some types of policies, such as home and auto insurance, you usually can set your deductible. For other policies, such as health insurance, the deductible is fixed, so you'd need to pick a policy with a deductible you can afford.
Since you're responsible for the deductible when you need covered services, it's important you always consider how much of a deductible is right for you. Here are some tips to decide:
1. Understand the relationship between deductibles and premiums
While most people would naturally like a lower deductible because that means paying less money out of pocket if a problem arises, lower deductibles come at an added cost. If you reduce the deductible on your insurance, or if you pick a health insurance policy with a lower deductible, premiums tend to be higher. Premiums, or the monthly cost you pay for a policy, are fixed and predictable costs you have to pay to stay covered regardless of whether you end up making an insurance claim or not.
Some people would prefer to pay higher premiums all the time for the peace of mind that comes with knowing they don't have to pay much out of pocket when a problem arises. But this isn't always the right choice. For example, if raising your auto insurance deductible from $500 to $1,000 would save you about 10% in premium costs, and you're currently paying $900 per year for car insurance, you'd likely save around $90 annually by raising your deductible.
If you put this money into a savings account, you'd be able to save up the extra $500 to cover the higher deductible in about 5 1/2 years. If you didn't get into a car accident in that time, you'd be better off. You could keep that money saved in case of an accident and continue to benefit from paying $90 less each year for insurance. Of course, if you did have a collision during those 5 1/2 years and had to pay $500 for repairs, you'd end up worse off with larger total out-of-pocket costs than if you'd paid for the more expensive policy.
2. Consider the likelihood you'll need to make an insurance claim
With some types of insurance, you can't really predict when you're going to need to make an insurance claim. It's hard to know, for example, when your car might be stolen or if someone might break into your house next year. But when buying health insurance, there are times when you'll know if you're going to need more coverage.
If you're going to have a baby next year, if you have a chronic condition that requires regular doctor visits, or if you have an operation planned, then you know you're going to use your insurance. If that's the case, you'll probably benefit from getting a policy with a lower deductible. But if you have no medical issues, are young and healthy, and almost never go to the doctor, you may decide to gamble on a policy with a higher deductible and lower premiums under the assumption you probably won't actually need your insurer to pay for much care.
3. Know what's covered outside of the deductible
With some policies, you get full coverage for certain types of services before you've met your deductible. With car insurance, for example, you may be able to get your windshield repaired without incurring any costs, even if your deductible for collision or liability coverage hasn't been met. With health insurance, you can usually get preventive care and screening at no cost even if you haven't yet met your deductible.
Knowing what coverage you have before meeting the deductible will help you to assess the likelihood you'll need to pay out of pocket for services.
4. Assess your savings rate to make sure you can cover your deductible
Be sure you have the money available to cover your deductible if something happens. If you have a $2,000 deductible and have $2,000 in an emergency fund or in a health savings account, you don't need to worry much if you must go to the doctor or if something happens to your car or house. But if you have $0 saved, you could be in trouble if you end up covering a hefty deductible -- especially as you usually need to come up with the money right away if you get sick or your car or house needs repairs.
If you'd end up relying on high-interest debt to cover costs with a high deductible policy, you may be better off paying a little more for premiums so you don't have to worry about this happening. You can then work on saving to cover your deductible and change your policy once you have the extra cash in the bank for what you need if something goes wrong.
5. Don't get the wrong insurance coverage
Insurance is supposed to protect you from unexpected costs and ensure you can cover essential expenses when something goes wrong. Now you know how to adjust your deductibles so you can fully benefit from this protection without spending for coverage you don't really need. The key: Find a policy that's a good fit.
If you have any questions regarding any of our insurance policies and would like one of our insurance professionals to review your policy and deductions with you, click here to make any appointment.
Most employee errors are simple work-related mistakes that can be easily fixed. However, without the proper precautions in place some seemingly-innocent employee errors can lead to costly consequences. A minuscule error such as a typo in a contract or a program’s code or a missing signature on a document can turn out to have dramatic financial repercussions for a business if left unchecked.
Many employee errors are considered the result of “employee misunderstanding,” which is defined as; mistakes caused by employees’ misunderstanding or misinterpreting of operations, job functions, and policies. Often, these mistakes can be reduced by implementing better communication efforts.
Human error is unavoidable. As an employer you don’t want to punish employees for every single accident they make, but you also don’t create a workplace environment in which mistakes are occurring frequently. Business owners have a responsibility to protect their operations from as many preventable financial risks as possible in order to remain profitable and successful. Below are some of the steps management can take to reduce costly employee errors.
Assess and Document Errors When They Happen
Before you can take precautions to reduce costly employee errors, it’s helpful to know what the most common errors are for your particular business. Document employee errors and the results of said errors – even if no performance management steps were taken – to give you a foundation to make necessary changes in policies and procedures or for future training opportunities.
Get Rid of Unnecessary Stress in the Workplace
One of the main reasons employees make mistakes is because they are stressed and/or rushing to finish their work. Ensure your employees aren’t constantly being made to compete against each other or aren’t being given unreasonable deadlines to meet.
Set Forth Clear Policies and Procedures
Most errors can be prevented just through proper training and enacting clear policies and procedures. If there are tasks that seem complicated, create a checklist to help employees self-audit themselves and ensure they are submitting error-free work.
In some cases there may be an employee who still makes frequent mistakes regardless of the steps taken by management. When the decision is made by management to let an employee go because of their performance, it can potentially result in claims against the company. Management liability insurance, also called directors and officers coverage, can help protect against financial loss resulting from these types of claims, pay for legal fees and indemnity payments for settlements or losses in court and give employers one less costly error to worry about.
If you are interested in Management Liability Insurance or E&O Insurance, click here to speak with one of our insurance professionals.