Insurance and Risk Management for Small Business Owners

Many small business owners truly believe that when they have a proper and comprehensive insurance program for their business, they will be “fully protected” from financial losses. Setting aside the grey areas on the fine print of most insurance policies, there are many losses that insurance cannot be extended.

Some of the such losses that small business suffered after occurrence of accident; are lost of goodwill to customers due to failure to deliver merchandises on time; lost of faith from employees for not providing a conducive working environment, and many more losses which do not have financial impact initially but gradually translate into financially losses.

While insurance is important in indemnifying small business owners in case of fire damaging their properties and/or accidents that causing injuries and loss of life thus downtime in productivity, small business owners should practice risk management in order to create a more sustainable business and have a competitive edge over their competitors to minimize their lost time hence cost.

The basic methods of risk management are

1.Avoidance of Risk

Simple procedures and things that most small business owners took for granted can have huge impact when they resulted in accident. Always practice the maxim of “prevention is better than cure.”

2.Reduction of risk and losses

Be aware of the consequences of risk and accident, develop a loss prevention or reduction system to minimize the occurrence of risk and losses when risk happened.

3.Transferring of Risk

Transfer the risk to other parties like insurance company.

4.Keeping of risk and absorption of losses.

If transfer of risk is not possible, you may have to absorb some of the risk and/or losses. Some of the insurance policies require the insured to bear a portion of the losses term as deductible or excess.

Arranging a comprehensive insurance cover for small business is crucial for the survival, many small businesses have overlooked or ignored the important of a proper coverage for their business, when accident happens, they found themselves in a financial distress and thus loosing their customers to their competitors.

It is thus advisable to seek professional advice for a proper insurance coverage and more importantly practice good risk management.

SK Wong is a Charter Marketer with a MBA in Finance. He surrently provides Marketing and Risk Management trainings and services to his local business community. He now also focus on Internet Marketing Strategy to assist small and home businesses in his community to complement and support their offline business. Get more Small and Home Business Marketing and Finance Ideas and Strategies in his Internet Marketing Strategy Center.

Quality Options on Business Insurance By Haig Artan

It is important to shop around when in need of business liability insurance and other types of coverage for your business. Always keep in mind that prices vary—sometimes by a substantial amount—from company to company for identical coverage. · In many cases, you can choose among companies or brokers who specialize in your type of business. Call several until you feel comfortable with their level of knowledge so that you can become familiar with the types of business liability insurance and other coverage they provide.

Once you’ve decided with whom you’d like to do business, make sure the insurance carriers are in good shape financially. Check the financial health of insurers with rating companies such as A.M. Best and Standard & Poor’s, and consult consumer magazines such as Consumer Reports. Remember that when you buy business liability insurance and other types of coverage for your business from an insurer, you are relying on that company to be there for you.

Deductibles Lower Your Premium Costs

Deductibles represent the amount of money the carrier will deduct from any claim before they will pay you. The higher the deductible you choose, the less you will pay for the policy. Be sure, though, that you have sufficient funds on hand to cover that higher deductible if you need to file a claim. If you are a small business owners, you can often insure your business risk by purchasing a package policy, such as a Business Owners Policy (BOP) instead of individual coverage. A package policy provides appropriate standard coverage and limits of liability for smaller businesses. Your insurance broker can provide invaluable advice to help protect your business from unexpected disasters. Be sure to keep him or her informed about any major changes in your business—major purchases, expansions, or changes in the nature of your operation. In addition, ask about disaster planning and reducing risks such as fire or work-related accidents.

Always remember, if you don’t talk to your broker in fear that your premium will rise, you may be overlooking the purpose of your insurance project all together. You may be better off taking your broker’s advice and raising the deductible(s) in order to reduce the premium, should his/her advice generate a premium out of your budget. It is better to be faced with a deductible out of budget, rather than going uninsured and exposing your business to risk you may not be able to afford to self insure.

Having the right business liability insurance and additional coverage, plus a well-crafted disaster plan, can save you money in the long run. It might even save your business from going under. That’s why it’s more than worth the effort to do some research before you sign the contract.

Protect your business by selling your risk to a reputable carrier and a broker who will service your business as you deserve. A conscientious broker will also shop the risk among carriers in the market on your behalf.

How to Get Cheap Small Business Health Insurance in Massachusetts

As a small business owner in Massachusetts with 2 to 50 employees, you can get a group rate on your health insurance and save money on your and your employees insurance premiums. Here's how small business health insurance works, and where you can get small business health insurance in Massachusetts at a discount rate.

Benefits of Small Business Health Insurance

With small business health insurance you and your employees pay lower premiums than you would with individual health insurance. You also get more extensive coverage, plus you get tax deduction for any health insurance contributions you make.

How Small Business Health Insurance Works

Health insurance rates and health insurance coverage are calculated for all participating employees using the group's average age and health. Any additions that an employee wants can be added to his or her policy for an extra fee.

Small Business Health Insurance Plans

Comprehensive small business health insurance plans pay for doctor visits, hospital visits, and prescription drugs. There are two types of small business health insurance plans:

Fee-For-Service Plans - Also known as indemnity plans, these plans let you use your own doctors, specialists, and hospitals. You pay an insurance premium for your plan, plus a deductible (usually $500 to $2,000) before your insurer begins to pay your claims. Most plans cover 80% of medical costs, and you or your employee pay the remaining 20%.

Fee-For-Service plans are the most expensive plans and involve the most paperwork.

Managed health care plans (HMOs, PPOs, POSs) - These plans restrict you to using doctors and hospitals within the health plan's network. With HMOs and POSs you or your employee pay a monthly premium and a co-payment (usually $5 to $10) for each doctor visit and your insurer pays your medical expenses. PPOs and POSs let you use non-network doctors and hospitals for an additional fee.

Managed health care plans are the least expensive plans and involve the least amount of paperwork.

Cheap Group Health Insurance Plans

To get a cheap group health insurance plan you need to shop rates from different companies. Thanks to the Internet, you can do this quickly and easily by going to an insurance comparison website. All you do is fill out a simple questionnaire with your insurance information and the amount of coverage you want, wait for your quotes, then choose the best plan with the best rate.

Visit http://www.LowerRateQuotes.com/health-insurance.html  or click on the following link to get Massachusetts small business health insurance quotes from top-rated companies and see how much you can save. You can get more insurance tips in their Articles section.

The author, Brian Stevens, is a former insurance agent and financial consultant who has written a number of articles on small business insurance in Massachusetts.

North Carolina Self Employed Health Insurance Issues

A small business faces an almost overwhelming number of issues when it comes to providing benefits to their employees: Should a small business provide group insurance to their employees? How many employees does a small business need to have to qualify for a group insurance plan? What about the option of providing individual insurance plans for the employees? What are the rules that I must follow?

When a business is starting out, many times it is a single person operating the company. The owner-employee, many times, considers starting a group insurance plan - because it is a business and is a tax deductible expense. Actually, this doesn't make sense for two main reasons. You, likely, don't have enough employees to be considered by a group plan. Most insurance companies require at least three employees to consider insuring the group. Secondly, group plans are typically much more expensive. Why? Because their underwriting is quite different. A group plan must accept anyone to the group no matter what new employee's health conditions. In an individual plan, each individual's health history is considered and the premiums are less expensive.

Assuming standard health, the individual plan will be approximately 20 to 30% less expensive than a group plan. Rather than providing group coverage, most small employers find that they can provide an equal amount of money to each employee. (Be careful here. You cannot play favorites -- all employees must receive the same amount of money. Another restriction is that you cannot say that they won't get the extra money if they don't buy an individual health insurance plan. It is best to consult a competent certified public accountant.)

A self employed individual can maximize his tax deductions, minimize his risk of a catastrophic loss, and decrease the cost of his insurance plan by choosing an HSA or health savings account plan. This is a combination of a high deductible health plan and a savings account that you open up at the local bank.

The high deductible health plan is considerably less expensive than a low deductible copay type plan, as you might guess. Typically after the deductible is met, the insurance company covers 100% of medical and drug expenses. There are no copays to see a doctor and there are no copays for drugs. To see a doctor, you can expect to pay $60 instead of $30 for the usual copay type plan. The concept is that you take care of the "little expenses" and the insurance company will take care of the "big expenses".

The second part of the combination is the HSA or health savings account. You get a tax deduction for merely setting aside savings -- you don't have to use that money to get the deduction. Just put the money in the account. If you don't use the money for medical expenses and drugs, the money does not vanish like it does with the flexible savings account type plan that many employer's offer. This money is yours, and it will be there to earn interest or as the years go by. As the amount of money grows, you can invest the money as you wish. Earnings, interest and value growth are not taxable until you take the money out of the account at the age of sixty five.

In summary: It is advisable for the self employed individual to purchase a high deductible health plan and open an HSA or health savings account. This minimizes his cost, decreases his risk, and taxes advantage of tax deductions. In addition, if the self employed individual has the money available, he should open the health savings account to get an additional tax deduction.

After the company grows to about eight to ten employees, the company should investigate switching to a group health plan.

Richard Day has years of experience finding the exact plan that will fit his client's needs. He adopted the HSA concept early, and will help you to understand how they work. This link for more information concerning the Blue Cross Blue Shield of North Carolina, Blue Options HSA. If you would like comparison quotes visit: http://www.ehealthinsurancesource.com 

Home Business Owners - The Need for Adequate Health and Liability Insurance

If you are like most small business owners, finding and securing good health insurance coverage can be difficult. Even if you do find a program that fits your needs, the monthly expense may be substantial. While you may feel healthy enough and choose to ignore purchasing a policy temporarily, you know that even a minor illness or injury could quickly turn into financial difficulty for you and your business.

Individual health insurance is often costly, but the total financial impact of a serious illness or injury can be devastating. Even if your budget is strained somewhat by dollars spent on insurance, consider it a necessary cost of doing business. If you are young and in reasonably good health, consider a higher deductible plan to help reduce the monthly premiums. There are many so-called 'major medical' plans available that can cap the total amount out of pocket, should you have a major medical event. Though this type of policy may force you to cover the first $3K-$5K, this amount should not be enough to cause financial ruin. Without this type of insurance, a major illness or surgery could cost upwards of $100,000--and the result for most people would be bankruptcy.

As the business grows and money becomes more available, you can reduce the deductible during the renewal period and still maintain adequate coverage. When a spouse has insurance coverage as a result of their employment, this can be a great way to have coverage during the early years of your business. Remember to keep the spouse's policy intact, even if their job goes away, by utilizing COBRA benefits through the following year. It will be difficult, if not impossible, to obtain coverage for you and your family if you do not have current coverage at all. Keep in mind that most new plans will have a one-year waiting period on pre-existing conditions, but some may waive this requirement as long as you have not had a lapse of coverage for more than 30-60 days.

The local or regional chambers of commerce in many communities have partnered with insurance providers to offer health plans for the small business owner and their families. Your state may also have health insurance programs open to individual business owners. If your business has at least one employee, some insurance companies have plans available.

In addition to good health insurance coverage, you should also get quotes for liability insurance. This is to protect you in the event that someone gets injured while on your property. Unfortunately, even close friends may opt for legal action to recover costs for medical bills. One such event could put your business out of commission.

What about prescription drugs? There are numerous prescription discount plans to cover small business owners who have no other health insurance coverage. While these plans seldom cover the total cost of a prescription, the discounts can be substantial, especially for generic drugs.

Although small business owners do not have access to the lion's share of affordable policies, there are some good options available. If you are having trouble locating an affordable health insurance plan, ask other small business owners for referrals. It's amazing how everyone seems to have a brother, sister-in-law or good friend that either sells insurance or knows someone who does. Be persistent and take care of this issue. Your health, and the health of your business, depends on it.

Cathy Yeatts is a successful online entrepreneur and direct sales marketer. She is passionate about supplying new entrepreneurs with systems and products that are effective in building personal wealth. Learn how to successfully increase your income: http://www.path-2-wealth.net 

 

 

 

 

 

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