Every business has its own demands. That’s a given. If you’re running a flower shop, you have your own set of skills and equipment that you need. If you’re a hairdresser your skills and equipment are somewhat different. Same goes for a handyman, a fitness pro, or a therapist. The list goes on, but there are certain aspects of running a business that always remain the same, no matter what you do.
For example, every business needs to pay its employees’ salaries, pay its taxes, and get insurance. Yes, we said insurance. While everyone wants to save money, cutting corners on business insurance is never a good idea. More than that, in many cases, insurance is required by the law. In others, insurance simply makes good business sense, protecting your business from unpredictable illnesses, accidents, and other potentially damaging events. Rather than an expense, each type of insurance – including employer’s liability insurance – is your way to protect your business from the hassle and costs of a wide range of incidents.
Types of insurance a business owner might need
Before we get to employer’s liability coverage, let’s take a short look at the main types of insurance your business may require.
General liability insurance – This is the number type of insurance any business needs. It includes slip and fall insurance for claims of physical injury to a third party; personal injury to a third party like accidental defamation of character or copyright infringement; and property damage if you’re working in a customer’s home or place of business. It is absolutely essential for protecting your business and helping you land jobs.
Professional liability insurance – Professional liability insurance is also known as errors and omissions insurance. What it does is protect your business against claims of negligence that are specific to your line of work. For example, if you are a nail technician and your customer gets an infection in her finger following a manicure, she could potentially sue you for making a professional error that caused this infection. If you have professional liability insurance, you’re covered.
Worker’s compensation insurance – This form of insurance can cover wages, medical payments, and rehabilitation costs for workers who’ve been hurt or got sick on the job. If you have employees worker’s comp is a non-negotiable. That’s because it is the law.
Property insurance – Whether you rent or own your workspace, it is very important to have property insurance. This type of insurance covers replacement costs for loss of equipment, inventory, signage and even furniture if they are damaged or destroyed by a storm, fire, or theft. If you work from home, keep in mind that your homeowner’s policy likely doesn’t cover your business in full, so you’ll need to add it on specifically to your policy.
Commercial auto insurance – This type of insurance is mostly the same as any other vehicular insurance, just on a commercial level. It is essential to have if you or your employees are on the road for work reasons. The minimum you need is coverage against third-party injuries, in case of an accident. But it’s also worthwhile, for most people, to take out insurance that covers your own vehicle damage as well.
Health insurance – Health insurance is a major benefit that many employers provide for their workers. The field here is wide, but in general, it covers all or part of a worker’s health expenses such as doctor visits, medications, and surgery.
Remember, these are just some of the types of insurance you may need for running your business. Depending on your line of work you may also need others like product liability insurance, business interruption insurance, and even life insurance. As such, it’s always worth talking to a reliable insurance agent when you’re starting out. Or, if you prefer, consult with another tradesperson like yourself, to see what types of coverage they carry.
Employer’s liability insurance coverage
There’s one more type of insurance we skipped above, and that’s employer’s liability insurance. What is employer’s liability insurance and what does employer’s liability insurance cover?
Basically, employer’s liability is an insurance policy that covers costs that result from claims made by both current and former employees alike, for workplace injuries, sickness, and even death. If this sounds similar to worker’s comp, you are in some ways right. In fact, many call employer’s liability insurance part two of their worker’s comp policy. And that’s because essentially what your employer’s liability insurance policy does is cover the costs not included in a standard worker’s comp package.
While worker’s comp is required by law, and is set with strict parameters on a state level, it does not always offer enough coverage. Employer’s liability insurance fills that void. This can include covering things like injuries or illnesses not recognized by your state as an occupational hazard. It can also cover certain types of workers, like those engaged in agriculture or domestic help, that aren’t generally covered by a worker’s comp policy. Or it can cover what are called punitive damages. That is, when an employee wants compensation for the pain and suffering he or she endured, on top of the actual injury itself.
Also keep in mind, while worker’s comp covers medical fees, it doesn’t cover you in case an employee sues you over work-related injuries or illness. Employer’s liability insurance, however, does. In other words, it’s an added layer of protection, covering both the payouts (if necessary) and your legal fees. For example, if an employee, for whatever reason, chooses not to accept their worker’s comp payment and chooses to sue you instead, you’re covered. It can also cover you from being sued by the worker’s family member. In this case, say your worker injured his back on a carpentry job, his wife could sue you for the mental anguish it caused in their relationship. Similarly, she could sue you for the bad back she developed in having to physically care for her husband. And the list goes on.
Bottom line, having employer’s liability insurance is not only recommended, in some cases, it’s the law. But more than that, with the added protection it offers, it’s simply a matter of good business.