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Licensed and Insured

You see the signs on the sides of contractor’s trucks “Licensed and Insured.”  This is supposed to give the person or business that hires the contractor a sense of security.

Contractors and small business owners are required to obtain insurance by some regulation or contract. For example, state law requires businesses (depending on the industry) to hold a bond in order to get a license.  When you rent office space, a landlord will have insurance requirements in the lease that you need to meet.   If you have employees, then by law you are required to maintain a workers’ compensation policy to protect them from an injury on the job.

But what does licensed and insured really mean?

I sit with these small business owners all the time and they usually have no idea of the coverage they have or what the policy covers.  They do not know the difference between liability coverage and property.  When I ask what perils need to be covered or what is their deduction or retention I am meet with blank looks on their faces.

An insurance policy is a legal document spelling out all the coverage’s and exceptions written in such “legalize” that the layman cannot easily understand all the coverage’s and exclusions unless they have had some training in contract law.

So what does a business owner do?

You know your business, you know what you do, what tools or supplies you have and what issues you might encounter on a daily basis.  You need to determine how much of that you are willing to take responsibility for and how much are you willing to pay out of your pocket if something happens. This will give you an idea of what risks of injury or property damage you may have.  Once you understand the risks your business has you will want to transfer a portion of that risk to an insurance carrier.

Going to your insurance agent and obtaining a policy is fine, most agents use “package policy” specifically for your industry and occupation.  To make sure that you are covered for the risks you have you will need to ASK QUESTIONS and find out if YOUR concerns and needs are met.

 

Is there coverage for you tools on the jobsite?

What if you are at a client site?

What if your clients come to you?

Questions like these will ensure that you and your business are insured properly.   So when you look at “Licensed and Insured” on your vehicle or store you can feel confident that your business has what it needs to succeed.

 

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Independent Contractor or Employee?

The phrase “1099 employee” is spoken many times during our conversations with Human Resources Managers and owners of information technology companies.  It seems to be difficult for businesses to determine the status of workers for tax purposes.  Knowing the steps to take will make the process easier and will help you avoid any penalties for wrongly classifying contract employees.  Here are some highlighted points on what the Internal Revenue Service says about 1099 workers.

 The IRS refer to common laws that define how to classify workers:

  • Behavior: Does the company control or have the right to control what the worker does and how the worker does the job?
  • Financial: Are the business aspects of the workers job controlled by the payor?
  • Type of Relationship: Are there written contracts or employee type benefits. Will the relationship continue and is the work performed a key aspect of the business?

Differences between Employee and 1099

Employees are paid on a w-2.  Taxes and Social security are taken out of their salary.   Anyone who performs services for you is your employee if you can control what will be done and how it will be done.

Independent Contractors (1099) are self-employed and are responsible for understanding the tax obligation check out this site to help. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

1099 ARE NOT EMPLOYEES

The definition of a 1099 is that of an INDEPENDENT CONTRACTOR.  They can be a separate entity, LLC or Corporation; they can also be an individual or Sole Proprietor.

If you are still confused on how to classify your workers the IRS will help you determine the proper way to classify your employees. The website gives you an interactive page to submit the request.  Properly classifying your workers will enable you as the employer to avoid costly fines and penalties.

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Independent Contractor or Employee?

What’s right for your needs?

The phrase “1099 employee” is spoken many times during our conversations with Human Resources Managers and owners of information technology companies.  It seems to be difficult for businesses to determine the status of workers for tax purposes.  Knowing the steps to take will make the process easier and will help you avoid any penalties for wrongly classifying contract employees.  Here are some highlighted points on what the Internal Revenue Service says about 1099 workers.

 The IRS refers to common laws that define how to classify workers:

  • Behavior: Does the company control or have the right to control what the worker does and how the worker does the job?
  • Financial: Are the business aspects of the workers job controlled by the payor?
  • Type of Relationship: Are there written contracts or employee type benefits. Will the relationship continue and is the work performed a key aspect of the business?

 

Differences between Employee and 1099

Employees are paid on a w-2.  Taxes and Social security are taken out of their salary.   Anyone who performs services for you is your employee if you can control what will be done and how it will be done.

Independent Contractors (1099) are self-employed and are responsible for understanding the tax obligation check out this site to help. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

 

1099 ARE NOT EMPLOYEES

The definition of a 1099 is that of an INDEPENDENT CONTRACTOR.  They can be a separate entity, LLC or Corporation; they can also be an individual or Sole Proprietor.

If you are still confused on how to classify your workers the IRS will help you determine the proper way to classify your employees. The website gives you an interactive page to submit the request.  Properly classifying your workers will enable you as the employer to avoid costly fines and penalties.

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Transferring Risk from Businesses to Insurance Companies

Commercial General Liability (CGL) is a form of property and casualty insurance that business should have to protect them against liability claims. It mitigates the risks and costs associated with a business being sued.  Instead of liability claims resulting in expensive and timely litigation, the risk is transferred to the insurance carrier that the policy is in place through.

general liability insuranceWhether at fault for a claim or not, a business may still be held liable for damages that occur. The insurance carrier will cover the costs, up to the policy limit, that are associated with a claim made against a business having a Commercial General Liability policy.

A company’s exposure to a risk of liability can vary depending upon the different activities involved in conducting business.  Specifically, a general liability policy is recommended if your business:

  • Visits clients
  • Has clients visit them
  • Owns or leases expensive equipment
  • Works offsite.

Businesses are likely to face financial setbacks that are difficult to overcome without adequate coverage in place. Liability insurance could make the difference between having a successful and predictable business environment or an unpredictable one subjected to unforeseen expenses.

Liability claims for bodily injury, property damage, and personal injury are all covered under a standard commercial general liability policy with adequate coverage. These damages and injuries can occur:

  • On premise
  • During operations
  • From a product
  • After the completed operations of a product
  • Or through advertising.

Advertising and personal injury can occur if another company feels as though it has been slandered  verbally, in writing, or while marketing and advertising . When paying out of pocket, even a false accusation against a business nearly always results in some form of negative financial consequences. A Commercial General Liability policy serves as protection for businesses against these associated costs by diverting law suit expenses to insurance claims.

Depending on the policy in place, an insurance claim through a Commercial General Liability policy can either be covered by occurrence or on a claims-made basis.  An occurrence policy handles injury or damage claims that occur while a policy is effective or in force, regardless of when the claim is submitted. A claims-made policy handles only claims that occur and are reported during the policy period. Typically, policies purchased on an occurrence basis have higher premiums than those purchased on a claims-made basis.

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Deductible Decoded

Deductible is a term we all relate to insurance.  If you have ever had health insurance, car insurance, or property insurance, then you have most likely dealt with a deductible.  So why is it there?  Almost every type of insurance incorporates a deductible into the policy.  The deductible is the portion of out-of-pocket expense that the insured is responsible for before coverage kicks in.

Insurance companies find that by giving the insured responsibility for the first portion of the coverage they avoid large numbers of trivial claims.  Reducing the amount of payout and claims results in higher savings.  The insurance carriers use those savings to lower premiums for their customers. Insurance is all about risk and when the insurance companies are able to transfer a portion of the risk to the policy holder premiums go down.  You can see this effect when you shop for quotes on car insurance, raising or lowering the deductible changes the premium up or down.

Health insurance companies include deductibles and co-pays to share part of the expense of medical benefits with you.  A co-pay is a fixed amount that you pay at the time you receive a medical service.  The details are laid out in your benefit summary and are included on your medial id card. The deductible is the insured’s out-of-pocket responsibility before medical benefits kick in.

We hear the question “why do I have to pay a deductible if I’m already paying a premium?” quite often and the answer is simple.  The deductible and co-pay help get the insured involved.  If you didn’t have a deductible you would just run to your doctor or hospital where test are conducted, professional’s asses you and medication is prescribed just for a common cold.  With a deductible in place, the insured has to think twice before running to the doctor or hospital for minor issues.  This helps reduce the cost of claims saving the insurance carriers money and lowering premium.   A common deductible in today’s health insurance plans are about $1,500-$3,000 it encourages the policy holder to be smarter and conscious about the medical decisions we make.  If we become a smarter healthier consumer the insurance premiums will go down by saving the insurance carrier money. We have also seen an adverse effect to high deductibles and co-pays.  We find that people will avoid going to the doctor or buying prescriptions to avoid co-pays and deductibles.

For your auto and property insurance the deductible is pretty straight forward.  The deductible applies on claims arising from damage to or loss of the policy holders’ vehicle or property.  If your auto is involved in an accident, regardless of whose fault it is your policies deductible will have to be paid first before your insurance coverage kicks in.  The same with your property, before it can be repaired or replaced a specified deductible that was agreed on must be met.

The deductible is an integral part of insurance and helps maintain the lowest cost possible.  Though not poplar when it comes time for a policyholder to pay it, you will think healthier and drive safer before having to pay your deductible.

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Tips for filing an insurance claim

Believe it or not, most businesses rarely have to ever submit a claim to their insurance company. But, when property is damaged or liability issues arise you will need to file a claim with your insurance company.  This is the way in which insurance carriers determine if a policyholder’s claim is covered under their business insurance policy.  Filing an insurance claim is likely a result of negative business issue so it’s stressful before you even get started. Understanding the steps you need to take to file a claim and protect your business will make an already stressful situation much easier.

Here are some helpful tips when filing an insurance claim:

  • Know where your insurance policy is! Your policy tells you all of your important coverage information like what’s covered, what’s excluded, and any deductibles.  Keep your insurance policy in a safe place that is easily assessable.  Your policy will also have the insurance carrier information, your agent information, and other important contacts that you may need.
  • Contact your agent or insurance company quickly. This is an important tip because all insurance policies have a specified time in which you need to file a claim.  Contacting the agent or insurance company as soon as possible makes it easier for the insurance carrier to assess the claim and apply it to your coverage. And, you don’t want to miss out on reporting a claim because you waited too long.
  • Document everything. Your records of what happened may be the difference between your insurance company covering the claim or not.  Keep track of every person you speak with by documenting their names, job title, date and the conversations you have with them.   Take photos of damage or broken property and make a list of its value when purchased.   It is important to have proof of what your property looked like before and after an accident.  Photos and records will help you and the insurance company resolve claims correctly and quickly.
  • Make temporary repairs. Take action when property is damaged and make temporary repairs that prevent further damage. Insurance companies want you to take the first steps to fix the problem. Repair holes in your roof or walls and cover up furniture to avoid more harm.  Don’t make permanent changes or throw furniture or other items away until an adjuster inspects them. Take photos and save your receipts for the repairs and any temporary living expenses these expenses will be included in the claim.
  • Settlement or Negotiation.Be prepared to negotiate.  Insurance companies review the adjuster’s assessment and determine the payout for your settlement.  If the settlement does not meet your expectations, you can argue the payout by having an independent contractor give you a second or third opinion.  With their estimates you can ask for a bigger payout.  You can also bring in a public insurance adjuster.  These non-partial third parties are experts in insurance claims and can help build you case for a larger payout.  Keep in mind that they charge homeowners for their services sometime 10% of the settlement.

Insurance claims are never a fun process but with these tips you can better educate and prepare yourself to get a fair settlement.

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Important Information About Health Insurance Exchanges

The new Federal Health Care Reform Law requires all employers to notify their employees about the availability of public health insurance exchanges before October 1, 2013.

On Wednesday, May 8, 2013, model notices were released for employers to provide to their employees. By providing your employees with these notices, it satisfies the law’s requirement so it is extremely important you comply with the law and distribute to them.

The notices are slightly different depending on whether you offer a health insurance plan or not. Below are links to the notices.

I offer a health insurance plan for my employees
I don’t offer health insurance for my employees

Both notices explain how the exchanges will operate and the conditions that need to be satisfied for employees to obtain federal premium subsidies to purchase exchange-provided coverage.

Additional information about the health care insurance exchanges can be found on www.healthcare.gov  or through the Department of Health and Human Services.

If you are a business owner or employee who has  any questions about the new health insurance exchanges, please don’t hesitate to contact us today. We’re here to help.

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5 Things to know about Personal Umbrella Liability Insurance

5 Things to Know About Personal Umbrella Liability Insurance

In today’s unpredictable, finger pointing world, people can sue you for just about anything so it is important to protect yourself and your money. Without umbrella coverage you may not have enough insurance to protect your assets. Our environment is volatile and random so don’t be caught in the rain without an umbrella.  Here are five things everyone should know about Personal Umbrella Liability Insurance.

  1. Excess coverage. Umbrella liability is designed to be excess insurance on top of another policy.  An underlying policy such as a homeowners or auto insurance policy must be in place first.  Umbrella extends the amount of Liability coverage you have.  Say your homeowner’s liability is for the amount of $300,000, if an injury or claim where to exceed the amount stated on the policy the remainder can be your responsibility.  For example, a claim for $1,000,000 is filed against you, your Homeowners can cover $300,000 but what about the leftover $700,000?  With a personal umbrella the amount exceeding the original policy is covered by the umbrella limits.
  2. It’s for everyone! You don’t have to be super rich to have a personal umbrella policy.  Everyone deserves the right to protect what they have worked for their whole lives.  This coverage is affordable; hundreds of A+ rated insurance companies have umbrella programs priced for everyone.  Enjoying life is what it is all about and you work hard for the little extras in life.   If you have an ATV, camper, or boat the opportunity for incident is greater.  Protect yourself and start enjoying life.
  3. Broad coverage. You may be faced with a situation that is not covered by your homeowners insurance.  If someone were to sue you for slander for instance, this would fall under personal injury Liability which is not usually included in a homeowner’s policy.  But if you have umbrella liability in place personal injury is part of the broad coverage of the umbrella so you don’t have to go to your pocket to defend the suite.   The umbrella policy is a shield for you and your family filling in gaps of coverage in your home or auto insurance policies.  Filling these gaps prevents leaks of coverage that can put your savings, nest egg and college funds at risk.
  4. Prevent Your Ruin. It’s a normal day like any other, except today you are involved in an auto accident, rear ending the car in front of you and injuring the driver.  Today is not your lucky day as the person you hit is a corvette driving executive and he is seriously injured and cannot return to his very important job.  A jury awards him a multi-million dollar settlement that you have to pay.  This can leave you financially ruined.  The courts will go after you savings, your home and may even take part of your salary for years.  This situation is preventable of course with personal umbrella insurance.  Strengthen your insurance policies by adding broader coverage with extended limits.
  5. Worldwide Coverage. If you travel often a personal umbrella provides international coverage for personal liability.  Say you are enjoying a pristine golf course in England, the wind is howling and you new clubs are being tested every stroke.  Unfortunately your golf game isn’t the greats and with one wild swing you manage to hit a person in the head with your shot.  Following the incident the victim is unable to work and looking for compensation.  If you are sued for this matter international you are covered as the liability portion of your policy follows you internationally.

 

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What is Workers Compensation?

What is Workers Compensation Insurance?

If you are injured on the job you will require compensation for lost wages and medical bills. But who do you go to for compensation? Before workers compensation laws were enacted employees would have to sue the employer and prove that they were at fault or negligent. This did not help either party and would leave someone with a huge financial loss. After many years of passing laws and countless court cases each state in the union now has some form of compulsory workers compensation law requiring every business with employees to have a worker’s compensation insurance policy in force. This gives every employee the right to medical benefits and wage replacement in case of injury, while relinquishing their right to sue the employer.

How does workers compensation work?
When a business purchases workers compensation insurance they are paying an annual premium for a injury or illness benefit. Workers Comp provides payments for medic bills and lost wages to employees who are hurt on the job and may not return. To receive medical payments and wage replacement a claim must be filed. After treatment is administered the employee needs to contact the employer and file a claim with the insurance carrier. This is the only way benefits can be given out to the employees. A claim will trigger the insurance carrier to review the claim and determine if the policy benefits apply. The insurance carrier will do a thorough investigation reviewing the injury, talking to witnesses and contacting the employer. They are trying to determine if the injury was work related and covered by the insurance. They will investigate the seriousness of the injury the ability of the employee to continue to work. These factors will decide the amount of wage replacement the employee can receive. Please refer to your states workers compensation laws for more details.

For the Employee
The employee is guaranteed the right to medical payments and wage replacement if they are injured or become ill on the job. If injured, workers’ compensation has medical benefits to pay for reasonable medical treatment, prescriptions and hospitalization services related to the work injury. There are different medical benefits for different types of injury. There are temporary total disability benefits, permanent partial benefits, permanent total benefit, and death benefits. These benefits are to help the employee while out of work for an extended period of time usually more than 7 days. Providing wage replacement (generally two-thirds of their wages are paid) and medical payments.

For the Employer
Workers compensation protects the employer from law suit by their employees, with an active workers compensation policy, employees relinquishing their right to sue the employer. This gives the employee confidence that the employer is taking care of them if an injury occurs. Every state has workers compensation laws that the employers need to follow. Compulsory workers compensation law makes it mandatory to provide workers comp or face a penalty from the state. These penalties can be expensive so avoid them and contact your local agent to find out more about the state specific workers compensation law.

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