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IPS / Lighthouse Insurance Group Blog: business insurance

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small businessSmall Business, Big Liabilities

Your business may be small, but that doesn’t mean your liabilities are. Liabilities are the potential damages that your company can be held financially responsible for if someone is monetarily or physically injured by your products, your services or while on your premises.

The first step toward determining your potential liabilities is not to look at your annual sales or profit—because your liabilities are not limited by how much you can afford to be liable for. Instead, you must start by looking at your risks.

Where are you exposed?

Your risks are the areas that leave you exposed to potential liabilities. This will vary based on your business. For example, if you have a storefront and have customers come in, then you have risks that include slips and falls. If you work from home, you still may have risks when a package delivery service person brings you a business package—because they could fall on your front steps.

If you have a product you send out to customers—even if you don’t manufacture it—you could be sued if the item causes physical damage to someone. If you provide a service, you could be sued if you damage your client’s property. If you have a small shoe repair company, you could be sued if you perform a faulty repair that results in an injury or if you damage one of your clients’ high-end shoes.

An insurance agent who specializes in business insurance can help you identify the specific risks faced by those in your industry. He or she can also help you choose the right lines of liability coverage—from general liability to professional, malpractice to errors and omissions.

Measuring potential liabilities

As you can see, risks are almost endless no matter the size of your business. Once you have an idea of those that your business faces, you should try to imagine the potential expense of the damages each one could bring. This will consist of medical expenses, lost wages, court costs, damages, and so on.

We can help you anticipate the financial damages you can encounter by looking at statistics and real-world examples from your industry. When you are ready to make sure all your Michigan Business insurance needs are covered, give us a call 800-220-5582.

Do you own a business with employees?  If you have even one full-time employee or more than two part-time employees Michigan law requires that you have Michigan workers compensation insurance

Michigan work comp insurance pays for all medical and rehabilitative costs and lost wages that result from an employee’s work-related injury or illness.  The standard Michigan work comp policy also includes employer liability coverage – protection in the event an employer is sued as a result of an employee’s work-related injury or illness.  The cost of the insurance is definitely worth the price paid if an employee is injured on the job. 

An employer without workers compensation insurance can be liable for all expenses that an employee would be entitled to by Michigan law; and that can be hefty!  One accident could quickly put your business out of business.  And, if that isn’t enough, the law provides that employers can be fined up to $1,000 per day for failure to carry proper workers compensation insurance!

Call Insurance Planning Service today at 800-220-5582 for a quote on Michigan Work comp insurance.

By Richard D. Bernard, AAI, CIC

Contractors Equipment

If you’re making final preparations before your company’s busy time of year this spring or summer, it’s the perfect time to evaluate your current insurance coverage.  Columbus, Ohio-based Grange Insurance offers four important considerations for seasonal employers to address before business starts to peak.

1. Am I planning to hire any seasonal employees?
Landscaping companies, construction companies and several others hire millions of seasonal workers each spring and summer. If you’re planning to hire any seasonal employees, including teens, be sure to minimize your risk and properly train all of them on necessary safety procedures. These procedures may include steps to avoid injury and damage to company property.
Review your workers compensation insurance with your agent to be sure that payroll estimates are up to date.

2. Have I purchased any new equipment within the last year?
This may seem like a simple question, but often when people purchase new equipment at the end of a season, they forget to secure the appropriate insurance coverage for these items. After you’ve confirmed these new pieces of equipment are insured, also check to make sure the coverage you do have has relevant limits.  Talk with your independent agent if you are uncertain as to what your policy covers.

3. Am I planning to bring a vehicle or other piece of equipment out of storage?
If so, consider taking these vehicles or other pieces heavy equipment to be serviced before you put them back out on the road. Proper service and maintenance can significantly reduce accidents and other safety hazards. And, if any of these vehicles and the tasks they perform are more specialized, you should also double-check with your agent to make sure you’re adequately covered.  Non-traditional equipment like tow trucks, gravel hauling equipment or construction equipment may not be covered under a standard policy.  Discuss your vehicles and any special equipment attached to them with your agent to be sure you have the correct insurance in place.

4. Have I checked my buildings and various properties for winter damage?
Early spring is the best time to check any buildings or other structures for winter damage. Consider taking a walk around all your properties in an attempt to locate any roof damage, gutter blockages or any other potentially dangerous situations. If you identify any potential issues, address them with your insurance agent immediately.

Call your agent at Insurance Planning Service to review your business policy to make sure it includes everything you need for your seasonal businss. Call today at 800-220-5582 or use our online contact form.

Excerpts courtesy: Grange Insurance newsroom

ProfitWould you believe that there is an insurance product specifically designed to help insure a solid, sustainable profit? In fact, without this coverage, hitting your profit targets may become impossible.

For example, you own a restaurant. Your location in the heart of the office district is the key to your booming lunchtime trade. But a kitchen fire destroys your building. Your building and personal property insurance coverage is superb. Within nine months you will be reopening in one of the finest constructed buildings in your area, with totally new kitchen equipment and dining room furnishings. In fact, a few of your friends keep telling you how lucky you were to have the fire, since the old place was looking a bit dowdy. (Hopefully the fire department and insurance company don’t agree you came out TOO well, or there may be delays while they complete their arson investigation.)

Only one problem. You go broke after six months.

Why? Because although your building and personal property insurance will do a fine job at replacing your physical assets, they don’t pay a nickel towards your lost profits! And at some point, it’s going to become very clear to you that the real reason you wanted to be in the restaurant business was not to own a building. It was to make a profit. And that you did not insure.

Any business which generates revenues (and name one that doesn’t) risks facing this same situation. What can you do?

Commonly known as “business interruption” or “business income” coverage, insurance is available to pay your profit lost if due to a cause of loss covered by the policy. One type of loss not covered, for example, is lost revenue resulting from bad business decisions. If your lunchtime restaurant trade collapses because you bet the health food and vegetable juice bar was going to be your ticket to the top, but everyone within fifty miles of your location loves steak and ribs, there will be no coverage.

Covered causes of loss for your business income insurance will usually be the same as those covered in your building policy, such as fire, theft, and windstorm.

How does business income coverage work? Let’s use our aforementioned restaurant friend.

After the fire, his insurance carrier will ask for information documenting the lost profit. There are going to be some estimates involved, because the profit you are documenting never took place. And the profit you are making a claim for is that lost during the nine months the business is closed by the fire. Clearly the better your recordkeeping, and the more stable your business revenues, the better the estimate of your lost earnings.

One frequent misunderstanding arising from this type of insurance is what will actually be paid following a loss. The insurance is designed to cover what you lost, not your total revenue. If you normally would have grossed $50,000 month for the nine months, the insurance will not pay you $450,000!

Why? If before the fire the business was grossing $450,000 and after the fire it is grossing $0, isn’t it obvious the business lost the entire $450,000? Not if you remember much of that $450,000 went to pay for bills that may no longer be coming in, or will be greatly reduced during the rebuilding. For example, a major overhead cost for a restaurant is food. If the place is closed, that food bill will disappear. Along with it will go much, if not all, of the utilities, income taxes, janitorial and similar expenses. Since you no longer have to pay those bills, the insurance will not pay them either. And your revenue loss will be determined accordingly. A good rule of thumb is to think of it this way: the insurance doesn’t look at what your business put in your pocket, but rather what the covered loss took out.

Taking that perspective, what is coming out of our restaurant owner’s pocket during that nine month rebuilding period? Net profits plus any continuing expenses. Not every bill stops arriving. Insurance, advertising, payroll and other types of overhead will still have to be paid, although the expenses will likely be smaller than if the business was in full operation.

Payroll is a special case. Depending on how long the business is going to be shut down, is it reasonable to keep every employee fully compensated during that time? If your restaurant is going to be closed for three weeks, probably. But for nine months or longer? And if the insurance did cover full employee payrolls for an unlimited time, one or more of your employees might decide a good fire now and then is a nice option to create paid vacations!

Call your agent at Insurance Planning Service to review your business policy to make sure it includes business income insurance  Call today at 800-220-5582 or use our online contact form.

Source:  Trusted

Office ClutterTell the truth—does your home office look a little untidy, cluttered, disorganized? Do you plan to get it under control as soon as you can find the time, but worry that the “time” will never come? If so, you’re not alone.

According to the Bureau of Labor Statistics, 64 percent of self-employed people do at least some work at home. For these entrepreneurs and small-business owners, it can be challenging to keep paperwork under control when there are so many other priorities on their to-do list. And it’s not just a matter of knowing where to put what. Being organized also involves making sure that your business has everything it needs to run smoothly and profitably.

Why not belatedly celebrate “Organize Your Home Office Day,” March 8, by getting your business environment under control. It’s only a few days late!  Start by physically improving your space and then go one step further, reviewing how that space—and by extension, your business—is protected.

A well-organized office is more efficient, more productive and ultimately, more profitable. And carrying the appropriate types of business insurance protects that profitability in the event of unfortunate circumstances or life events. Insurance and other employee benefits can also be attractive incentives to help you recruit the best talent as well as retain and compensate your most valuable team members.

While you may think that property and liability insurance. policies are all you or your company needs, you should be aware of other equally important types of business insurance.

~ Business Continuation - The goal of business continuation coverage is to safeguard your family and your business in the event of adversity. Options include individual insurance, key person insurance and buy-sell agreements.

~ Individual Insurance— As a business owner, you need to carry sufficient insurance to cover any business debts secured by personal assets. Otherwise, your family may be forced to sell or liquidate the business—possibly at a loss—to pay off those debts, which may leave little or no money for their ongoing living expenses. (Not sure how much you need? Use LIFE’s Life Insurance Needs Calculator.)

~ Keyperson insurance— Depending on your business, obtaining keyperson insurance on certain employees can be beneficial, since it helps make up for lost sales or earnings or covers the cost of finding or training a replacement should that staff member become disabled or die.

~ Buy-Sell Agreements— In a business with shared ownership, a buy-sell agreement allows the co-owners to buy another owner’s share of the business in the event of death, disability or retirement. Buy-sell agreements are typically funded with life insurance policies, allowing remaining business owners to buy the company interests of a co-owner’s share, if he or she were to die, at a previously agreed-upon price. Business owners should also insure against the risk of becoming disabled and unable to work. In this case, disability buy-out insurance would fund the buy-sell agreement, allowing the disabled owner to be bought out, typically after a one-year waiting period.

~ Employee Benefits— When weighing job offers, candidates review both the pay rate and the compensation package, which can include life, health and disability insurance as well as retirement plans. If you want to recruit and retain the best employees, discuss all the benefits package options (including voluntary benefit programs) with your insurance advisor to make sure you have the right mix.

~ Executive Compensation—Executive compensation plans, designed for your most valued employees, provide a higher level of benefits and compensation along with significant tax advantages. Options include deferred compensation plans (including SERPs), section 162 plans and supplemental disability income insurance. Again, rely on your insurance advisor for recommendations and information.

While all this information can initially seem overwhelming, your agent at Insurance Planning Service can walk you through the details and help you develop a comprehensive plan for protecting your business as well as those who rely on it. Use “Organize Your Home Office Day” as an incentive to arrange a business policy evaluation with your insurance advisor. Then you can relax and enjoy your well-ordered office space, knowing that everything, including your insurance coverage, is well organized and on track.

Check in with us at Insurance Planning Service to painlessly go over the details of your business insurance policy.  Call today at 800-220-5582 or use our online contact form.

Source: LIFE Foundation

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Lighthouse Group Main Office in Grand Rapids, MI
Mailing Address | P.O. Box 530009, Livonia, MI 48153

Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake