Dear Dan: As my business expands, I’m realizing how much exposure I have if something goes wrong. Employee injuries, theft, business interruption and a range of other scary things are making me think more about the insurance I don’t have. What are some good insurance information sources that won’t just try to sell me something?
– At Risk
Dear At Risk: Small companies – especially those with fewer than 20 employees – don’t always understand or address the many business risks that they face every day.
Six vital risk categories include workers’ comp; group health and disability; business property and liability; commercial auto; group life and key person life; and home-based business insurance.
But according to research just completed by the National Association of Insurance Commissioners, millions of small businesses lack important coverage. For example:
1. About 41 percent of small businesses with fewer than 20 employees lack workers’ comp insurance, which state law requires for most companies. Workers’ comp protects business owners from claims by employees who have a work-related injury or illness. You need a separate policy for this specific type of coverage.
2. Some 52 percent of small businesses lack commercial auto insurance. Most seem to rely on personal auto insurance. But personal policies typically have lower liability limits and may even exclude business-related liability.
3. Only 47 percent of small businesses offer health insurance to their employees.
4. Nearly half of all home-based businesses depend on their homeowners’ insurance to protect their business. But that can be a huge mistake since most homeowners policies severely limit coverage of business property and may totally exclude business-related liability claims.
5. And while three-quarters of small businesses say they depend heavily on one or two key people for survival, only 22 percent carry key person life insurance.
6. Likewise, barely one in three small businesses carries business interruption insurance.
These free resources can help – and they won’t try to sell you anything:
• A new Web site just launched by NAIC, called “Insure U for Small Business,” has materials in English and Spanish. Visit www.insureUonline.org and click on “small business.”
• Consumer Information Source is a free service that lets you compare your insurance company’s consumer-complaint ratio to that of others in the industry. Visit www.naic.org/cis.
• The Insurance Information Institute (III) is also free and loaded with helpful information. Visit www.iii.org/smallbusiness.
Daniel Kehrer can be reached at editor@business.com.
