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New Business- Starting from scratch

Ideas for Start-up Business Plans

So you have decided to (or maybe you are still considering) taking a leap most of us only dream of. That leap is to start your own business. Perhaps you have worked for someone else in your trade for several years and want something of your own. You may be fresh out of school (or still in school) and want to get started early. Maybe you just have a unique opportunity to start your own business. If this is you than you are probably looking at what you need to start:

Start up capital
Supplies
Office/shop space
Sales opportunities

These are things all first time business owners are looking for. One thing many new businesses put off until last moment is insurance. You will spend thousands of dollars just to start up your dream of owning your own business; you don’t want one accident to take it all away from you. Below are several insurance policies that can protect you from claims that could easily ruin your dream of owning your own business. Here we will go over the basic areas that you want to look at for starting your own business, and when you want to start looking.

First, Why is this important? Claims with new businesses can be more devastating for a few reasons.

The controls that are in place to prevent/reduce the extent of claims/liabilities are less established. Many of these types of firms can be started in a home office.
New businesses are many times less defined in their operations, which can bring the operations in to areas the business owner may not be as familiar with. These areas they may not have as much experienced in. This can bring up more risks a
Some businesses do not have an established LLC or Corporation established. Regardless of the insurance policies you have, it’s important to work with your attorney and CPA to make sure you choose the business entity type that works best for you. This separates your business liabilities from impacting your personal assets. It is bad enough if the incident you could have protected closes your business, but it is a much worse situation if the same incident causes you to lose your house or your savings.

Here are a few policies we recommend you start out with pretty early on:

Commercial Auto – Commercial auto is a topic in itself and oftentimes one of the most overlooked policies by a new business owner since many people just use their personal auto’s and don’t see this as something they need. This might not be the first new policy you look to get, it should be the first insurance policy you likely already have that you will want to look at changing though. If your using your personal vehicle for business purposes, at the very least you want to make sure your agent and insurance carrier is aware of that and that you have business use on your policy, upgrading your personal auto policy to a commercial auto policy might be a couple bucks more, but in many cases the difference is a lot less than you may expect, plus, a less expensive policy that doesn’t cover what you need isn’t really that valuable anyway.

General liability – Starting a business, general liability is the first policy most companies look for. If you’re a retail store its sometime referred to as “slip and fall coverage” to cover liability from bodily injury on your premise. Keep in mind, some of these policies only do that and might not cover all/any off premise damages. These policies come in a variety of forms and coverages and the pricing typically reflects that, that’s not also to say you cant shop to make sure you’re getting the best value. This for some business types can be packaged into a Business Owners Policy that can cover property and other additional coverages your company needs like Data Breach, EPLI and Hired/Non owned auto liability.

Workers Compensation – For starters let me clear a couple things up first: Workers Compensation is not automatic; it’s not something automatically gets taken out of payroll without you getting a policy in place first. This policy covers employee injuries when hurt on the job for medical expenses and a portion of lost wages. For some high risk businesses like heavy manufacturing, construction and transportation this can be one of the most expensive and hardest policies to get competitive quote’s on and can be frustrating for businesses owners that just want to buy the policy. The key in the beginning is getting a policy in place, pay your bill on time, and keep continuous coverage. Once you have a prover record, especially for 3 years with coverage in place the market is a lot easier to get coverage for companies that have established. If you are a labor intense business the pricing can seem very high, the expense for covering a claim out of pocket, and fines from many states can be just as expensive if not more than your premium would be anyway. This normally isn’t needed until you hire an employee, but sometimes contracts can still require it which can open up more business opportunities for your company.

Professional Liability – For some companies your biggest risks aren’t necessarily a customer slipping and falling, or an employee injuring themselves. Many professional firms have what can be equally as damaging of risks to them. The obvious ones are your Physicians Medical Malpractice, your insurance agents and accounts have Errors and Omission’s insurance to cover mistakes or professional errors made. Little mistakes can make huge claims but there are some companies you don’t think of needing this like Printing companies, Website Developers, IT Companies, Bookkeeping and Marketing Firms. Website Copyright infringement, or a faulty code in a software program that causes a glitch or even worse a breach could be a huge expense and could mean huge liability on your company.

Every business owner is worried about protecting what they own. The property you own can be devastating if its lost, damaged or stolen. However, the liabilities you take on during the everyday course of your business operation can be even worse and costlier. Even if you don’t own any property. There are insurance policies to cover the obvious, but also many things you wouldn’t think of. If there is a chance of an injury, fire, something stolen, or decreasing in value for something other than every day wear and tear (heck maybe there’s a policy for that too) there is likely an insurance policy for it. Working with a Professional Insurance Agent that can give you options and help guide you on the coverages that would be most important to you.

What exactly is the “Exclusive Remedy”

Exclusive Remedy

What is the exclusive remedy for risk management and small business professionals? In the world of insurance, the term ‘exclusive remedy‘ refers to the workers’ compensation system. These systems are administered by the sate governments of each individual state, not the federal government. In most states, this grand bargain began around 100 years ago. It was an agreement between employment and labor during a time when many employers severely abused the rights of workers. As a result of these abuses, many workers were beginning to unionize. In an attempt to keep both sides happy, most states created a workers compensation system to deal with both medical benefits to employees and protection from most lawsuits for employers.

workers-compensation-insurance-is-the-exclusive-remedy These workers’ compensation systems are administered by each individual state and not the federal government. Because of this, each state provides the system a tad bit different. Wisconsin was the first state to administer a workers’ compensation system in the year 1911. Mississippi was the last state to come around to the exclusive remedy in 1948.

workers-compensation-forms-aid-the-exclusive-remedy The term ‘exclusive remedy‘ came about because the benefits that are provided under the workers compensation system are supposed to be the sole remedy available to employees injured on the job. The benefits to employees are, they have the confidence to go to work knowing that if they are injured on the job they will have their medical costs covered and some lost wages. Employers benefit from the system by having most lawsuits taken away for injuries that occur as a normal part of business operations. Businesses are not covered for injuries that are caused by the intentional actions of the business and its management. This includes decision-making or neglect by the business to operate the way in which they do business in safe conditions.

Workplace-Safety-Toolkit-Exclusive-Remedy As time has passed and work environments have changed so has the opinion of many in the business community about the need for an exclusive remedy in todays’ business climate. A few states have removed workers compensation as a requirement for some types of businesses. A few other states have proposed the idea, but are still in a wait and see approach. At this time Texas and Oklahoma re the only states to implement what is referred to as an Opt-out program. This is a program where if the business qualifies they can elect not to carry coverage and provide an alternative to what most states give through the workers comp exchanges. Both have in place certain minimum standards that are similar to those standards required under most workers compensation systems. Opponents of these system frequently critique that there are very strict reporting policies put on the responsibility of the employee. In the system set forth by Oklahoma employees must report the injury to management within 24 hours or they may not be eligible for coverage. Most states are sitting in a wait and see approach and depending on the success or failure of these states will determine the future of the workers’ compensation system.

What does the rate reduction in California mean for everyone else?

This past week, the California Department of Insurance announced its approval for a 9.5 % reduction for rates on workers’ compensation premium for the state fund. This is good news for business owners within the state of California. It could also have ramifications throughout the California Workers Compensation Market across the country. Three things in-particular could impact the workers compensation market. Those three things are: Carriers on the open market will have to change their rates in the state to remain competitive against the state fund. Business owners who have less than favorable loss runs will be even more encouraged to control the frequency and severity of claims in order to take advantage of even lower premium on workers comp premium. Other states will be waiting to see if the rate reduction encourages businesses to continue to have a focus on safety and the rate of claims continues to lower. If this occurs than you can expect other states to follow-suit.

Carriers on the open market will have to change their rates

The main reason for having a state fund within the workers’ compensation system is to prevent carriers from charging outrageous rates on premium. When instances like this occur (Claims Costs throughout the state have gone down) the state fund lowers the rates to reward businesses for their actions. This will cause carriers on the open market to lower their rates in an attempt to remain competitive. It is in the carriers best interest for claims to be low. The less claims in an area means less claims the carriers have to pay for. If claims are low they in theory should be able to charge less in premium and still be able to turn a profit. In another state where claims are extremely high they will be forced to raise premium rates in order to deal with claims they are having to pay for. The amount the carriers lower their rates may not be directly proportional to the 9.5% reduction by the state fund, but rates should lower significantly on the open market.

Get the best answers to your questions about workers compensation in California at myinsurancequestion.com

Business owners will be encouraged to get their loss runs under control

The reason for the drop in rates is because of a drop in loss runs throughout the entire state. If people within the state fund see the benefit of lower rates on premium they will have even more motivation to fix whatever it is about their business that causes them to have to buy work comp coverage from the state fund. In many cases the reason for this is because of a lot of claims that caused their experience modification rating to be too high to find adequate coverage on the open market. Premium rates on the open market are significantly lower than rates in the fund.

Have a question about workers comp in California? Get the best answers here at myinsurancequestion.com

Other states will pay attention to see if the rate reduction encourages businesses behavior.

This action is rewarding businesses for a reduction in claims in the state. If this action makes the loss claim continue to fall, than other states will more than likely follow suit. If the loss runs again rise, many states may interpret that as the lowering of rates did not positively effect behavior. That being the case they probably will not lower the rates in their state if similar circumstances exist.

workers-compensation-california

Work Comp 101

Work Comp Insurance 101 – A Complicated Insurance Explained Clearly

I regularly speak to business owners that are purchasing workers compensation coverage for the first time. Most insurance agents do not take the time to explain how the basic process works. When this happens, business owners are purchasing a coverage they don’t clearly understand. It can lead to frustration on the part of the business owner and the insurance agent when something changes with the policy. Especially when the change demands more money. Work Comp Insurance is my niche. I make sure to take the time to explain the basic process of how premiums are developed at the beginning of the policy period and after the policy period ends. I feel it’s important to explain this coverage properly. By doing this I find that business owners understand why changes happen and what changes are important to pay attention to. I also make sure they know to notify their agent or insurance company throughout the policy period if any of these changes occur.

Work Comp Insurance and Employers Liability Coverage

The Basic Process:

Workers compensation rates are first dictated by the workers compensation classification code. Every industry does not have a specific code. A lot of times the process of how the work is completed is assigned to a work comp insurance code where the process is similar. For example, a business that puts waterproof coatings on parking lots would be classified the same as a painter because the process is similar.

After the workers compensation classification code is determined, in nearly every state the insurance company is able to file their rates depending on how competitive they want to be in an industry. The state typically sets the minimum and maximum rates, insurance companies file their rates within the range.

Work comp insurance policies require that business owners declare an estimated payroll for all covered persons for the annual policy period, 12 months from the date the policy begins. Business owners are tricky because states require that business owners are covered using a minimum annual payroll up to a maximum. If a business owner is included in coverage and takes less compensation than the state minimum, the additional payroll is added after the audit. If a business owner takes more than the maximum set by the state, then wage calculations stop at the maximum.

The total policy premium is determined by several factors. First the rate per $100 of payroll established by the insurance company per work comp insurance code. That rate is a percentage of the gross wages paid to employees in each workers compensation code. Second, different states can charge different taxes that are added to the bottom line. The insurance company typically charges an expense constant factor that is a flat fee. Then, the insurance company can apply credit or debits (discounts or increased pricing). All of these factors determine the final pricing when you activate coverage.

After the Workers Compensation Policy is finished a payroll audit must take place. The purpose of this audit is to determine the actual gross wages paid to covered persons throughout the policy period. Also, the auditor will double-check the work comp insurance classification codes for accuracy. If the agent used the incorrect workers compensation code OR something changed throughout the policy period, the auditor will adjust the workers compensation code. It’s very important to verify the workers compensation code for your business before purchasing a workers compensation policy. Your agent should be able to provide a detailed description of your workers compensation code to verify accuracy.

During the audit process, most insurance companies do not have the ability to staff auditors across the U.S. so they use 3rd Party companies to handle their audits. These 3rd Party auditors typically specialize in workers compensation audits for multiple insurance companies. Typically the auditor will make contact with the business point of contact within 60 days after the policy period has expired. It’s very important to set-up the audit as soon as you can coordinate schedules, make this a priority. The auditor will inform of the payroll documents needed, have all of them prepared. These auditors are required to complete the audit process within a small timeframe otherwise they return as non-productive. When an audit is returned as non-productive, the insurance company will process and mail to the business owner an “estimated audit” with a balance due and a cancellation notice. The business owner must contact the insurance company to re-open and process the audit. This is typically a headache, it’s a lot easier to make it a priority and take the necessary time to complete it.

After the audit is processed you will receive the results and either a balance due or a credit being returned. At this point the business owner should review and file a dispute with the insurance company IF the results are incorrect. The auditor’s duties are to capture the gross wages for covered persons and verify job duties. Auditor’s make mistakes, don’t ask the appropriate questions and sometimes they are new to the industry therefore, do not know all of the rules. I know these to be the truth, I speak with the auditor’s for clients frequently. Before filing the dispute the business owner should request the auditor’s notes from the insurance company to understand how they arrived at the results. Then, the business owner can file the dispute with the insurance company if there is an argument.

There are several rules within the workers compensation industry that surprise owners after audits are complete. The audit’s purpose is to accurately charge the owner based on what happened during the policy period. Workers Compensation audits are determined by the 4 bullets below:

Gross Wages for Employees of the business (no surprise here).

Gross Wages for Uninsured 1099 sub-contractors. This is the most common surprise. 1099’s is discussed further below.

Proper Classification Codes per employee job duties.

INCLUDED Business owners. In most situations, business owners are allowed to choose whether they want to be Included or Excluded in the workers compensation coverage. When a business owner chooses to be included, the State typically determines a minimum and maximum wage threshold. Rules for whether or not a business owner can be included/excluded and wage thresholds are determined by Entity Status (Individual, Partner, LLC, Corporation). If a business owner changes entity status during a policy period, it’s important to notify your workers compensation agent to determine if different rules apply. Otherwise, all adjustments are made at audit.

Uninsured 1099’s

This is one of the most common surprises for business owners after the audit is completed, especially in the construction industry. Uninsured 1099’s are added to the workers compensation policy based on the classification of work the 1099 is performing. Even if the state doesn’t require the 1099 to purchase workers compensation coverage, the only way for a business owner to exclude 1099’s from their policy audit is to collect a certificate of workers compensation coverage OR a “state approved exemption”.

It’s important to understand when a business owner can treat a 1099 like a true independent contractor and request a work comp insurance certificate.

1099 must use their own tools/equipment

1099 must drive their own vehicle

Contractor cannot determine when and where the 1099 is working. Must assign a project and let the 1099 execute on their own time.

1099 must also perform work for their own customers

1099 must carry appropriate licenses with state when required

5 coverages every Non-profit business should have.

The Non-profit Industry is a very wide industry that encompasses a large amount of different types of organizations. Some businesses simply operate a soup kitchen and only offer meals to those in need. Others offer medical coverage and still others offer construction services for those in need of housing. Each type of mission brings its own unique risks. That is why it is important for non-profit managers to partner with insurance agents who have knowledge in many different industries and agents who partner with a large amount of carriers. This can help the agent find the non-profit quotes from numerous carriers and will allow them to get your nonprofit more complete coverage and usually at lower rates on premium.

non-profit workers compensation insurance A lot of insurance carriers have restricted coverage for non-profit and charitable organizations due to a large amount of historical claims and their potential exposure from volunteers serving these organizations. A few carriers have taken a different approach to non-profits and created programs designed specifically to the unique needs of these businesses. Below is a list of six coverages most non-profits will need.

General Liability

General Liability Insurance covers you and your organization from damages done to third parties as a result of the actions of your organization. These can be bodily injury claims and property damage to anyone who is not you or your employee.

Workers’ Compensation

non-profit-workers-comp Workers’ comp differs from General Liability because it protects your business from being liable to injuries that occur to your employees. It is frequently referred to as the ‘Exclusive Remedy”. That is because it will pay for employee medical costs, disabilities, and lost wages related to on-the-job injuries and accidents. Your organization will benefit from this policy by having the security that you will not be sued by your employees for accidents that occur as a part of your normal operations.

Commercial Auto

Commercial auto insurance for your vehicles is an important aspect of any business insurance program. This coverage provides protection against physical damage and bodily injury resulting from car accidents involving you or your employees. Most coverages also provide some protection from theft and vandalism. Your organization does not have to own any vehicles to need some form of commercial auto coverage. For example, one of the most often overlooked business insurance coverage is Hired and Non-Owned Auto. Almost every business will occasionally utilize a personal, or non-owned vehicle for work related tasks. For example, your organization has an office staff member make trips to the bank to make a deposit of donations. Another example might be sending an employee to the restaurant to pick up food for volunteers. Every time someone uses a vehicle not owned by the non-profit to perform a business related function, the organization is at risk.

Cyber Liability

Most non-profit organizations think they are not at risk of a data breach. Many may think, I am a small organization with not much money, why would anyone bother to hack my organization. That is exactly what two small business owners thought when two of the largest data breaches in history occurred. Both the Home Depot and Target data breaches occurred by hackers first accessing a small business and then that small business had a vendor partnership with the larger business and that is how the hackers gained access. If you store any information about donors or have a partnership with another organization, you could be at risk of a breach. Most cyber insurance plans can be added to a (BOP) at minimal cost to your organization.

Commercial Property

business-property-valuation-for-commercial-insurance Commercial property is needed if you own property no matter the size of the premise. This will cover all property, including things like desks, chairs and anything physically attached to the building (i.e. shelvings, cabinets, etc.). Property coverage does not cover some specialized equipment like printers, computers or other office equipment. Coverage for this type of property would be covered under and Inland Marine Insurance Policy. These policies can easily be paired together under what is called a Business Owners Package (BOP). It is usually a good idea to ask your agent to quote a BOP because carriers are more likely to give your organization a discount on premium if you are carrying more than one coverage from them.

Owners and Officer’s

Owners and officer’s coverage might be the most important and frequently overlooked coverage for most non-profit organizations. The people who sit on your board are usually giving their time and expertise for free. Most just believe in you or believe in the mission of the organization. The last thing you want is for something to go wrong with your organization and them be liable for the actions of the organization.

liability-insurance-for-small-businesses Owners and Officers Coverage is for defense costs and damages (awards and settlements) arising out of wrongful act allegations and lawsuits brought against an organization’s board of directors and/or officers. Securing this coverage allows your officers to sit on your board and comfortably know they are not going to be liable for the actions of the organization.

Underwriting and What It Means to You

I have taken many calls from business owners in search of Work Comp. I would like to say that I have always been able to help. One common exception is when a business can only purchase coverage through the assigned risk pool and the truth is there are many businesses who have no other option. Assigned risk is outside the volunteer insurance market. Underwriting these industries is risky for the carrier and that makes it extremely difficult for an agent to find a carrier willing to quote the business.

Insurance agents typically interact with a minimum of 20 workers comp clients per day.

What ultimately puts a business into the assigned risk pool is what is called, underwriting guidelines. What can sometimes be a hurdle is explaining to potential clients that I am not the underwriter. I ultimately do not have the say on if a carrier will take on a particular business (risk). What makes a business a “risk”, whether it be a high risk or a low risk, is determined by the underwriter with the insurance carrier. There are many factors that determine if an insurance carrier will take on the risk of you and your business.

Insurance Underwriters research and assess the risk each prospect presents. Get all of your questions about underwriting answered at myinsurancequestion.com

Underwriters also research and assess the risk each prospect presents. This helps to create the market for securities by accurately pricing risk and setting fair premium rates that adequately cover the true cost of insuring policyholders. If a specific applicant’s risk is deemed to be too high, underwriters frequently refuse to cover it.

The most common reason a business is declined coverage on the open market is due to the business not having enough payroll for the exposure. Most construction businesses are going to need between $20 and $30k in payroll to be offered coverage by a carrier on the open market. Many of my potential clients ask me to just quote with $25k in payroll so they can get the policy they need. However, the policy will most likely be cancelled in a year due to not enough payroll or premium too small for risk.

The next reason for a business to be declined is because of 1099 or sub exposure. I should say that the amount of sub exposure to w2 employees makes a difference. Most carriers want no more than 20% of sub or 1099 employees. Just because a business has chosen to issue 1099 rather than W2’s does not automatically mean the employee is an independent contractor and should not have rights to work comp coverage. Many business owners assume that they do not have to provide coverage for the subs however if the sub or 1099 is not providing a Certificate of Insurance to the contractor or business owner, than the payroll will be picked up at audit. because of this the policy owner will owe in to the carrier for that employee. Ultimately what carriers worry about most with the subs is if there was a lapse of coverage the contractor would be on the hook for any claims that were to happen.

If I had to pick one other reason for a business to be declined coverage it is because of travel exposure. By travel exposure I mean using a vehicle to do work related to the business. Carriers deem this a larger risk because when the employees are driving there is a higher rate of claims and the claims tend to be more severe. It seems these days’ contractors need to go where the work is. If there is multi-state exposure where employees are traveling out of state or live near the border of two states, that is something that many carriers are not interested in writing. For instance, if a contractor sends 5 or 6 employees more than 50 miles away to do a job and they all ride together that is 5 or 6 claims that would have to be paid if they were all riding together and were injured in a car accident. Many employers think that while their employees are driving to work they are not covered under an employer’s work comp policy. That is accurate if you drive the same route to work every day and generally go to the same place every day. However, if you as a business owner send your employees on jobs that in tails driving exposure. The driving exposure is anything that would not normally be a part of everyday work. If the employee is solely driving for the reason of doing a job then the insurance carrier would indeed need to pay for the claims that arise out of a car accident.

Insurance is the most common example of underwriting that most people encounter. In order for insurance to work well, risk has to be spread out among as many people as possible. Underwriting helps insurance companies manage the risk that too many policyholders will file claims at once by spreading out the risk among outside investors. Once an underwriter has been found for a given policy, the capital the underwriter puts up at the time of investment acts as a guarantee that the claim can be paid. This allows the company to issue more insurance to other customers. In exchange for taking on this risk, the underwriter is entitled to payments drawn from the policyholder’s premiums.

Long story short the 3 reasons for businesses being declined by an underwriter are not enough payroll, too much 1099 or sub exposure and too much travel exposure. These risks are just a few that could result in your business being placed in the Assigned Risk Pool.

Workers’ Compensation Rates Could be on the Rise in Florida

Workers’ compensation insurance rates in Florida could be on the rise. As reported in outlets such as the Miami Herald, the Orlando Sentinel and the Insurance Journal. The National Council on Compensation Insurance (NCCI) filed for a 17.1 rate increase to take affect August 1st. The bulk of the recommended rate increase is due to an expectation that attorneys’ fees will increase the Florida workers comp landscape due to a recent Supreme Court Ruling.

The increased rates are unfortunate in that Florida workers comp insurance is already a significant expense to business owners. Furthermore, increased legal fees should not be a necessary expense to add to the system. Increased education, safety devices, adoption of return to work programs and decreased prescribing of opiates are all trends within the industry which are helping to control workers’ comp rates. Thus, while this appears to be a blow to work comp rates in the state, there are some trends that are working to reduce rates as well (which is a challenge given the ever increasing cost of medical care in the United States).

Another factor which drives Florida workers comp rates higher is the existence of fraud and other scams. Florida is one of the highest states in the country for fraudulent work comp claims, especially in the Miami area. Additionally, as demonstrated in this article from the Insurance Journal, scams to artificially reduce workers’ comp premium are prevalent in Florida. Scams and fraud unfairly increase work comp rates for business owners that are trying to work within the system.

Florida is what is known as a rate mandated state for workers’ compensation insurance. Wisconsin and several other states are set up like this as well. This means workers’ comp rates are set by the state. Work comp rates vary by employee classification and experience modifications, but they are otherwise set by the state. This is in contrast with most states where insurance carriers file rates and there is different pricing between carriers. Florida’s workers’ compensation rates are just below average compared to other rates in the most recently published national study.

Given Florida is a rate mandated state, business owners may wonder what they can do to reduce workers’ compensation rates. In Florida, a small number of carriers, such as Employers, have file with the state of Florida to offer a 5% discount from the rates set by the state of Florida. On the other hand, there is a consent to rate, which can be offered by certain carriers in Florida for difficult to quote businesses. This means a carrier offers workers comp insurance, but they are allowed to charge up to 25% more than the rates set by the state of Florida if an insured signs off on this pricing. If rates can’t be improved, business owners may have better payment options available such as pay as you go insurance. Furthermore, better safety practices leading to lower claims (and thus a lower experience modification factor) are always a way business owners can decrease their work comp insurance costs. Most within the industry believe the Florida legislature will make sweeping changes to the workers compensation system at some point in 2017 or 2018. So business owners can rest assured that in some way, help is on the way in Florida.

6 coverages every Lawn Care or Landscaping business should carry.

Lawn Care and Landscaping is a diverse industry and with that diversity comes a lot of risk. How you go about protecting your business from those risks can make all the difference in the long term success of your business. Some landscaping businesses simply mow lawns, others lay sod and plants shrubs, some even climb several feet into the air to work on trees and others grow and sell plants at one central location. No matter what type of landscaping business you are running, here are 6 coverages that every business in this industry should carry.

General Liability
Workers’ Compensation
Commercial Auto or Hired and Non-owned Auto
Inland Marine
Commercial Property
Business Owners Package

General Liability

General Liability Insurance is a policy that most every business needs. Depending upon the state and industry you operate in, it is required by law to be in business. For the lawncare and landscaping industry this coverage can prevent your business from damage that is caused to third parties by you or your employees. This can apply regardless of whether the incident occurs on your property or at the property of the customer.

Workers’ Compensation

In 48 out of 50 states workers comp is required by law. What you pay in premium will depend on your experience modification rating and the NCCI class code for your business. Lawn care and Landscaping is an industry that has several classification codes which include: 9102, 0042, 9182, 0106, 9220, and 9016.

Commercial Auto or Hired and Non-owned Auto

Commercial Auto and Hired and Non-owned Auto Insurance are two coverages that deal with vehicles being used for business purposes. Which of these two coverages your business needs is determined by whether or not the business owns the vehicle that is being used for daily work. If you have employees using their own vehicle as a part of their job than you need Hired and Non-owned Auto Coverage. If you are leasing the vehicle for the season, than this is the coverage you need as well. If your business owns the vehicle than you need commercial auto insurance.

Inland Marine

Inland Marine Insurance Coverage is also known as equipment coverage or floaters coverage. These terms are used because this insurance is for equipment not covered by your property or auto insurance policies and it is usually equipment that is going to be in transit. If you have a trailer with several pieces of equipment that is going to be transported to several locations throughout the day than you need this type of coverage. This could also be necessary for greenhouses if they are having plants delivered to a clients location. while the products are being transported they would be covered by this policy.

Commercial Property

If you own property, no matter how big or small than you need this coverage. Without it you can put at risk everything that makes your business run. Unless you can afford to replace the property and everything inside it than you need this coverage. This policy can usually be added to BOP for minimal cost to the business.

Business Owners Package

Most insurance carriers have what are called Business Owners Packages designed for each industry and each classification code. Through their experience with claims in each industry, each carrier has a basic recommended package of coverage they deem appropriate for each business. These packages can be adjusted based on the industry you are in and the amount of risk you as a business owner are comfortable taking. This is where the advice of an experienced insurance agent who you trust can be very valuable. An experienced agent should be able to lay down the risks and rewards of each coverage and help you to make the most informed decision possible when buying insurance for your business.

SIC Business Insurance Codes:

• 0781- Landscaping and Planning

• 0782- Lawn and Garden Services

NAICS Liability Classifications:

• 541320- Landscaper Architectural Services

• 561730- Landscape Services

Business ISO General Liability:

• Code: 97047- Landscape Gardening

• Code: 97050- Lawn Care Services

Common Workers Compensation Class Codes:

• 0042- Landscapers and Drivers

• 9102- Park Maintenance, Lawn Care, and Drivers

• 0106- Tree Pruning or Spraying

Workers Compensation Insurance Expert

Personally, I have written workers compensation insurance across the U.S. for 10 years. I have partnered with multiple industries and multiple insurance providers. While doing this I have realized the difficulty and importance of finding an insurance agent that specializes in this line of insurance. Especially finding an expert who has a positive relationship with the underwriters they work with. For most business owners, Workers Compensation Insurance is one of their biggest insurance expenses. It can be a nightmare to find if the business experiences’ a substantial change in payroll, or if the business has claims or a bad audit experience. Most insurance agents do not specialize in workers compensation insurance and because this they do not fully understand how it operates. Therefore, these agents do not want to jeopardize their relationship with their client and potentially lose the other lines of insurance such as general liability or auto by giving bad advice.

While speaking with business owners about workers compensation insurance I feel it’s important to explain the process of how the policy works. I attempt to explain what a classification code is, what the rate per $100 means and how uninsured and insured 1099’s are handled by the audit process. I do this in an attempt to help the business owner understand how the policy can change throughout the policy term. After the audit is completed, most workers compensation policies change in total pricing after the policy period expires. Since the policy is audited following each policy term it’s important for the business owner to understand the potential changes that could have a significant financial impact on their pocketbook. Do you want to work with an agent that doesn’t take the time to explain these potential changes to you?

When working with a workers compensation expert, the agent will be able to determine or research the correct workers compensation classification code. The correct workers compensation code determines the businesses pricing for workers comp insurance, it’s the most important first step in the process. After the classification code is determined the agent should explain the importance of estimating your employee wages correctly at the beginning of the policy due to the audit. If a business uses 1099 labor, it’s important for the agent to explain how that 1099 is either added or excluded from the business owners audit. After the policy period expires and the audit takes place, it’s important for the agency to be able to explain why the audit resulted in the way it did OR be able to help with disputing the audit. Business owners can typically accomplish this with the insurance company directly, however, I feel it’s important for your insurance agent to be able to review, educate and assist with correcting after an audit is finished.

One component that most business owners do not understand about insurance quotes is the relationship between the agent and the insurance company is very important. If the agents relationship with the insurance company is untrustworthy, it could cause the insurance underwriter to decline instead of quoting because they don’t trust the information given by the agent. If the agent doesn’t specialize in workers compensation insurance, it’s possible the agent is not providing the relevant information to the underwriter. It’s important to make the underwriter feel comfortable with the business they are reviewing before they are willing to quote, especially when it’s a more difficult or unfamiliar industry. Loss ratio of the clients that agent has insured with an insurance provider is extremely important. If an agency continues to insure bad businesses with an insurance company, suffering bad losses or them finding dishonest information at audit, that insurance underwriter will be less likely to quote for that agent and will not be as aggressive with pricing.

Work with an expert when trying to find optimal pricing for workers compensation insurance. Not only will an expert know how to explain and assist but they will have the relationships established with insurance providers that will give you the most competitive pricing.

Should I Buy Workers Comp Insurance Online?

Should you buy workers comp insurance online?

Over the last 10 years or so, more and more insurance providers are starting to show up online. Additionally, even many traditional brick and mortar agencies are at least starting to have a website presence. There are many things to look for in a commercial insurance agent. Among the things that first come to mind are adequately protecting your business from risk of loss, providing well-priced insurance and providing good customer service/being available for customers. Online based insurance providers often perform well at many of the things that are important to insurance buyers, but do they provide the same service?

Online insurance providers are typically high volume agencies. That can benefit customers in a number of ways. First, many of these online providers have access to many different insurance carriers which can allow substantial price shopping. Additionally, due to having a high volume, these online providers generally have good relationships with numerous insurance carriers. Those relationships can often be leveraged to benefit clients when appropriate. Furthermore, due to volume, the online providers often have substantial experience and expertise in the coverages they are offering.

Another advantage of online insurance providers is that they tend to be consistently available during business hours. It is often the case that traditional agencies may be more involved in your community and you may not meet your online provider face to face. However, due to their business model, online providers are typically available in their office during most business hours, which generally allows customer needs to be met promptly. Additionally, online providers are typically licensed in all states, so they are generally set-up to help if out of state insurance needs arise.

With workers’ comp insurance, most of the benefits are determined by statute/laws in particular states. Thus, if a reputable carrier is used and information and business information is fully disclosed, most business owners should be able to be confident that their business is adequately protected by the insurance they purchase. With other lines of insurance, like general liability and professional liability, it is possibly more important to establish a level of trust with your insurance provider. It is important to make sure your business information is reviewed, so that coverage gaps can be analyzed to make sure your business is protected. Establishing this level of trust can often be done over the phone as well as it can be done in person.

Another thing to consider is that online insurance providers may be more closely aligned with the direction of the insurance industry. Many insurance carriers are continuing to develop more and more technology. Online insurance providers are generally also tech savvy. They focus on technology development and utilization. Online agencies may be better able to pass on carrier technology to their clients, while also providing their own technology to clients. All of this is designed to make issues related to business insurance more efficient for you the business owner.

There are numerous reasons it may be beneficial to consider buying workers’ comp and other business insurance online. Prices are often very competitive. Online providers are generally available for customers and generally have substantial expertise in the insurance products they provide. Additionally, online providers are typically among the most tech savvy agencies in the industry, which is in line with marketplace trends and benefits customers. There are many things to consider in choosing an insurance provider, but online providers stack up well in many factors which are typically considered.