You’re a small business owner who’s made the smart, and likely required, first step of purchasing workers’ compensation insurance for your employees, but what comes next? What other small business insurance policies should you consider? And how much coverage is necessary?
Depending on the size and type of business you’re in, your next steps should include a businessowners’ policy or BOP, and employment practices liability insurance. Both are worthwhile and complementary to your workers’ comp coverage, and here’s why:
BOP coverage is like a homeowner’s policy for a small business. It’s needed to protect the building you’re in (if you own it), general liability, as well as your business’ property assets, including vehicles. Further, it can cover business exposures that can severely impact your revenue, like a power outage that closes your business for a week.
Not all BOP policies are the same, and there’s almost always price/coverage decisions to make. With BOP, it’s fair to say you get what you pay for. Yes, there are standard coverages, but there are also enhancement endorsements that cover additional exposures and have higher limits that can be beneficial to your business. Talk these over in detail with your agent or carrier.
Employment practices liability insurance, or EPL, covers certain workplace related claims made by employees, such as discrimination or harassment by a manager. EPL covers the cost of legal defense and, sometimes, claim payment on behalf of the business.
Employment-related claims might be more common than you would think. Some industry estimates say 6 in 10 small businesses face one each year. Costs for out-of-court settlements of individual cases involving issues such as wrongful termination, sexual harassment, discrimination, retaliation and breach of contract have commonly reached $50,000, not including legal counsel and defense of that amount or more.
EPL insurance is a relatively low-cost coverage that can provide protection against a catastrophic loss that a small business cannot afford. Check with your carrier to learn what types of employment-related events are covered in your policy.
One carrier. Fewer headaches: It’s often a good idea to keep your small business insurance coverages with one carrier. Not only will you potentially earn a discount on your premiums, but the simplicity of having one point of contact, one invoice and one policy mailing will help you organize and run your business more productively.
Further, if there’s a disputed claim, particularly one that crosses coverages – say a general liability claim that involves an auto, as in loading/unloading a truck – the plaintiff’s attorney will go after both carriers, creating headaches and inefficiencies that take you away from running your business. Strive for simplicity. Keep your coverages with one carrier.