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Yes, Workers Compensation Insurance Can be Costly, but Don't Cheat

Providing workers compensation insurance for employees can be a significant expense, especially in industries prone to serious injuries, such as those requiring heavy or potentially dangerous machinery.  While some employers may be tempted to misclassify workers as independent contractors rather than as employees in order to avoid worker’s comp insurance and other costs, the penalties for misclassifying employees as independent contractors can be severe.

IRS Guidelines for Determining Independent Contractor Status

According to the IRS:

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.  

Consequences of Treating an Employee as an Independent Contractor

If you classify an employee as an independent contractor, whether to avoid workers compensation costs or purely by accident, and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker as well as incur severe penalties. See the IRS guidelines for determining employee vs. independent contractor status for more information. 

Some Common Sense Guidelines for Determining Independent Contractor Status

While the IRS provides detailed guidelines for determining independent contractor status, it may be helpful to consider how one state simplified the criteria. New York State noted these requirements to be eligible for independent contractor status:  

• Advertising
  Has his/her own advertising (business cards, commercials, phone book listing, etc.)
• Authority
  Performs work via his own contract, permit, or authority
• Control
  Controls the manner and time for work performed
• Different Work and Customers
  Performs work that differs from the primary work of the hiring business, and performs work for other businesses
• EIN or Business Tax Return
  Has a Federal Employer Identification Number (EIN) from the Federal IRS or has filed federal business or self-employment income tax returns for work or services performed in the prior calendar year
• Equipment
  Provides all equipment and materials needed to perform services under the contract
• Liability Insurance
  Has liability insurance (and if appropriate, has worker’s comp and disability insurance policies) under its own business name and Federal EIN
• Obligations
  Has recurring business liabilities and obligations
• Profit & Loss
  Operates under a specific contract, is responsible for satisfactory performance of work, is subject to profit or loss in performing the specific work under such contract, and is in a position to succeed or fail if the business's expenses exceed income
• Separate
  Maintains a separate business establishment

Use Knowledge to Offset Higher Business Insurance Costs

Having the proper business insurance can be vital to growing your company and protecting your future. While every business varies in terms of exposure to risk and the related cost of coverage, knowing the 5 key cost drivers can help you reduce your insurance costs, whether you are in a mid-sized city like Reading or Allentown, a smaller city like York or Lancaster, or a large city like Philadelphia, especially if you consider costs before launching your business.

In the end, the cost of business insurance is driven by risk levels as perceived by your insurance carrier, and increases due to higher levels of risk. Regardless of the precise details associated with your business, your costs will be affected by some factors that statistically are related to your company type, company location, and other factors. 

Here are 5 Key Drivers of Business Insurance Costs:

#1 - Coverage Level Desired

It goes almost without saying that the cost of your business insurance coverage depends largely on the amount of coverage you desire. It is wise to get the advice of a trusted independent insurance agent before finalizing your coverage level. In some cases you may be able to reduce coverage in a policy if the coverage overlaps with protection already provided in another policy.

#2 - Business Location

Insurance costs may vary widely by state and by city. Businesses located in high-risk areas will pay higher rates. Risk assessments are affected not only by crime rates, but by the likelihood of incurring damage due to storms and other natural disasters. Check with your insurance agent regarding insurance costs prior to relocating your business or purchasing a new property.

#3 - Market

A business in an industry known for high losses will incur higher insurance costs, all else being equal. Industries known for physical risk and high worker's compensation losses will incur higher commercial insurance costs. Expect considerable swings in insurance rates based on the percentage of your employees working in an office setting vs. a construction or other setting known for physical risk.

#4 - Business Insurance Claims History

As with auto insurance and homeowners insurance, businesses also incur higher rates as the frequency of their claims increases. Consider potential cost increases that may result from filing a claim vs. covering the cost out of pocket without filing a claim, especially when you are considering changing insurance carriers. 

#5 - Optional Coverage Selected 

Although adding optional coverage increases your total insurance bill, optional coverage may be to your benefit. Consider business interruption insurance and key person insurance for executives and others who cannot be easily replaced, and whose absence is likely to cause a slowdown in business.

Do it Right - Get Help

Knowing the key drivers of business insurance costs and planning accordingly can help you navigate your insurance coverage options, and help you achieve the right level of coverage at the right price. Ask your independent insurance agent for assistance in understanding your options and the impact on cost.

We're Ready to Assist You with All Your Business Insurance Needs

American Insuring Group is an independent insurance agency located near Reading, PA, in Berks County. We can help you get the right business insurance coverage for your business at the best price by researching the most affordable insurance costs from our many competing insurance carriers.  Contact us today at 800-947-1270 and request a no-obligation, no-cost consultation, or fill out the form on our Contact Us page to get started.

Is Business Insurance Too Complicated?

Business insurance: mention the topic and count down the seconds until yawns form and eyes glass over. For some, commercial insurance is just slightly more interesting than reading the phone book or memorizing the periodic table of elements.

Perhaps that’s because business insurance seems complicated, or because we suspect we’ll never really need it.  Talking about what might occur, such as a catastrophe requiring financial assistance, rather than what is likely to occur (business as usual), can seem so abstract, such a waste of time.  

3 Things Needed for Entrepreneurial Peace of Mind

Ah, but think of it this way: wouldn’t it be great to have the peace of mind of knowing that you are financially covered against many of the uncertainties life can throw at you? Isn’t that better than the nagging feeling that you may be unprotected against some unknown liability for which you failed to get the needed business insurance protection? 

To get to that blissful entrepreneurial state of mind, you need 3 simple things, none of which require yoga classes or the  help of a Zen master: 

• Knowledge of basic business insurance terms and types of protection
• A trustworthy and capable independent business insurance advisor
• Decisiveness

Get all three, and in no time you’ll be covered with the right business insurance protection. Whether your business is in Reading, PA, Berks County, Philadelphia, Lancaster, Allentown, or beyond, every business owner who meets those 3 simple criteria sleep better at night. 

Buiding Your Business Insurance Knowledge: 14 Terms You Need to Know

While we can’t cover everything you need to know in this short post, we can get you started by presenting 14 key commercial insurance terms, each with a brief definition, in alphabetical order.  Read over them and then jot down some follow up questions for your independent insurance agent.  Once you have solidified your knowledge, decisiveness will follow. Take action for the good of your business, your employees, and your family.

1. Bonding
   A guarantee of performance required for many businesses, and often by general contractors, janitorial companies, and businesses with government contracts
   
   
2. Broker
   An independent insurance agent who represents multiple insurance companies, and is therefore in a better position to find the right business insurance at the right price vs. a single-company insurance salesman
   
   
3. Business Interruption Insurance
   Coverage to replace lost sales and income suffered due to a covered loss
   
   
4. Direct Writer
   The opposite of a broker, a direct writer represents a single insurance company
   
   
5. Disability Insurance
   Insurance that pays a fixed monthly benefit if one becomes disabled and unable to perform their regular job
   
   
6. Employment Practices Liability Insurance
   Coverage that protects the business from being sued due to the actions of employees, such as discrimination, abuse, sexual harrassment or wrongful termination
   
   
7. Errors and Omissions Liability Coverage
   Protection for accountants, consultants, and other business professionals against damages due to an error or omission in work performed
   
   
8. General Liability Insurance
   Business insurance protection against accidents of bodily injury or property damage to other persons or property
   
   
9. Key Person Insurance
   Life insurance taken out against a key person, typically an executive or other key person, with the business itself as the beneficiary
   
   
10. Package Policy
    A business insurance policy combining several types of protection in one package
    
    
11. Property Insurance
    Protects equipment and other physical property from losses due to fire, theft, and other incidents, and is available in the form of “named peril” and “all risk” versions
    
    
12. Replacement Cost Insurance
    Insures the business for the full current replacement cost
    
    
13. Umbrella Coverage
    Liability insurance protection for amounts exceeding coverage on main policies, in the event a lawsuit exceeds underlying limits of coverage
    
    
14. Worker’s Compensation Insurance
    Business insurance for medical, rehab, and lost wages for employees who are injured at work (usually state mandated)

There you have it. 14 simple business insurance terms that probably have you wondering what coverage you are missing, and ready to contact your independent insurance agent. Do that, and then get ready to be decisive. You’re almost there. 

How to Get Help with Your Business Insurance

Need help in figuring out the right commercial insurance protection for your Reading PA, Berks County, Philadelphia, Allentown, or Lancaster County business? Call us today at (800) 947-1270 for a free consultation, or click to contact us.

Are You at Risk?

Even if you have good automobile and homeowner’s insurance, you may be liable for excessive damages resulting from a major lawsuit.  Consider what would happen if you were to injure a doctor, lawyer, or other highly paid professional in a car or other accident that prevented him from earning his regular income for the rest of his life. A court could easily award damages far exceeding the limits of your auto, watercraft, or homeowner’s insurance policy. Such damages could drastically alter your lifestyle for many years to come.

That’s where umbrella liability insurance comes in.  The right policy will provide the additional protection needed to withstand such an event. 

You May be at Higher Risk for a Lawsuit

Higher-income individuals who cause an accident have a far greater risk of being sued as lawyers seek out those with deep pockets. In such cases an umbrella policy may provide the protection that could be the difference between maintaining your lifestyle vs. paying punitive damages out of pocket for the rest of your life.

An Umbrella Liability Policy May be More Affordable Than You Think

Umbrella liability insurance tends to be more affordable than other types of insurance because it comes into play only after your other insurance has been exhausted.  For example, a $1,000,000 umbrella policy would cover up to an additional $600,000 of protection on a homeowner’s policy with $400,000 of coverage. The same principle applies to automobile and watercraft insurance. Increased savings may be found by purchasing your umbrella policy from the same insurance provider as for your home, car, commercial property, or watercraft.

Commercial Property and Umbrella Insurance

Are you a business owner or landlord? If so, you are at greater risk of incurring a lawsuit. Landlord insurance in the form of an umbrella liability policy can provide additional protection against lawsuits from tenants, as well as from being sued for slander or libel by disgruntled employees.

Do You Have an Adequate Umbrella Policy?

If you would like help in obtaining the right level of insurance protection then please click to contact us, or call us at 800-947-1270.

Landlord Insurance Basics

Landlord insurance is designed to protect the landlord from incurring losses on his or her rental properties. This ranges from property damage to court/legal costs and more, including loss of rental income from a property that becomes inhabitable due to storm damage or other causes.

Do You Need Landlord Insurance?

Does life throw unexpected circumstances our way? If you are a landlord, then of course you need landlord insurance. The question is not whether you need it, but what types of coverage and how much of each type you need.  For example, with lawsuits rampant in today’s society, it is wise to consider coverage for discrimination and slander, even if you are certain that you would never commit either. To sleep better at night you may even want to consider comprehensive coverage, which protects you against circumstances not specifically identified in your policy.

Your Property is a Major Investment. Treat it as Such.

Would you go without homeowners insurance or car insurance? Then why consider going without landlord insurance? Your rental property value may easily eclipse your home value, and a loss of your rental property due to fire, storm damage, or other factors can lead to a long-lasting financial upheaval and loss of cash flow that can be easily avoided with the proper insurance coverage.

Not All Landlord Insurance is Created Equal

It is important for landlords to understand exactly what is and what is not covered under their policy. Policies may vary widely, so be sure to work with your insurance agent to understand all the important aspects of your current coverage and to uncover your potential vulnerabilities. For example, your policy may cover only certain types of damage, such as exterior vs. interior damage.  Likewise, legal costs may be excluded from your policy. Be sure to ask your independent insurance agent what types of additional coverage are available from your current carrier and from competing insurance carriers, and then consider switching carriers or upgrading your policy if needed.  Your independent insurance agent represents multiple insurance companies, so changing to another carrier is easy with the right agent.

Need Help Understanding Your Landlord Insurance Options?

Contact us today for a free evaluation: 800-947-1270

As a landlord, obtaining the right level of public liability insurance coverage is important for your peace of mind and your bottom line, especially when you experience a large claim against your landlord insurance.

5 Easy Steps to Better Public Liability Insurance Protection & Greater Savings:

#1.  Place All Your Properties on One Landlord Insurance Policy (Public Liability Insurance Policy)

It is possible to save a considerable sum by combining all your properties under the same insurance provider.  Rather than insuring each property separately, ensure them all under a single policy with a common renewal date. As a bonus, your bookkeeping will be simplified as well.

You can also phase your properties into a common Landlord Insurance policy over time by moving each to the combined commercial property insurance policy as the renewal date for each individual policy comes due.  As you purchase new properties, be sure to add them to the combined policy for even greater savings.  Depending on the insurer, you may be able to group more than one type of commercial property under the same policy, such as apartments vs. shops.

#2. Seek Professionals as Occupants

Consider gearing your marketing efforts to appeal to professional occupants with full time employment.  Some insurers charge a higher premium for landlords of college students and others who statistically are more likely to cause property damage. By seeking occupants who are full-time professionals, you are appealing to a low-risk group with correspondingly lower landlord insurance costs.

#3. Insure Your Properties for the Right Amount

Property values and replacement costs are constantly in flux. Therefore, check the amount of coverage on each property periodically to be sure that it accurately reflects your true replacement cost.  If you are over-insured then your premiums will be higher than they would be for the right amount of coverage. On the other hand, if you are under-insured then you risk incurring major and lasting financial problems if your property is destroyed and you lack sufficient insurance protection to rebuild it properly.

#4. Add a Larger Deductible to Your Landlord Insurance Policy

By adding a larger deductible to your policy, your premiums may drop significantly. This approach amounts to self-insuring for the deductible amount. Follow these steps to determine if paying a higher deductible is likely to be a better deal:

1. Find out the annual premium cost to insure your properties with your current deductible amount vs. the cost with a higher deductible.
2. Multiply the annual savings by 5 years (or whatever period you are likely to keep the property) to estimate your total savings on landlord insurance premiums over a 5-year period.
3. Determine how many claims you would have to incur over 5 years before your savings on premiums would be consumed. If that number of claims looks unrealistically high, then it may make sense to increase your deductible and pocket the savings in premiums.

#5. Add a Security System to Your Commercial Properties

This is one of the most often-overlooked ways to save. Even a simple burglar alarm may save a meaningful amount on your insurance, possibly 10%. Compare the 5-year savings to the cost of the system. Chances are good that you may be money ahead by adding the system, and you and your tenants will have greater peace of mind as well.  An independent insurance agent who represents multiple companies provides the best opportunity to save by comparing quotes from competing insurers. 

Get Help

Do need help in finding the right landlord insurance for your commercial property? Contact us today for a free, no-obligation consultation on ways you can save more while enjoying better public liability insurance protection.

For most small businesses, workers compensation insurance costs can eat up a fair percentage of their income. While this type of coverage is essential, especially for riskier professions, there are a few ways to minimize your workers comp insurance expenditures without sacrificing the level of coverage necessary for your enterprise.

Here are some helpful tips to keep your costs under control:

Correctly classify your employees

Take a look at what you are paying in workers comp insurance per employee, and then ask yourself if all of these employees require the same level of coverage in relation to the riskiness of their profession. For instance, a typical office manager is far less likely to require workers compensation payments than a typical carpenter. Most workers compensation insurance companies charge different rates for these professions accordingly, so make sure that you aren't being overcharged for workers compensation insurance that you don't need. 

Familiarize yourself with relevant OSHA safety standards, and train your employees accordingly

As they say, an ounce of prevention is worth a pound of cure. OSHA regulations exist for a reason, and one should always be careful about staying within the letter of the law in this matter. If you are unsure of the relevant standards, your local OSHA safety office can offer clarification. Make sure that your employees are well aware of their rights under OSHA statutes, and what they need to do in order to remain compliant. A workforce that is familiar and compliant with the basic safety standards of their industry is one that is less likely to utilize workers compensation insurance over the course of their tenure.

Ensure that all tools, equipment, and grounds are safe/in good working order

Make it a point to periodically check any motorized tools for dirt, debris, or other potential hazards, and have your employees periodically check things like brakes, fluid levels, and other vehicular aspects that can potentially pose a safety hazard if not up to par. Your workers compensation insurance is less likely to be needed if all tools and vehicles are in proper working order, so make sure that your employees understand that it is part of their regular work duties to clean, maintain, and lubricate their tools, vehicles, and work stations alike. You should also make sure that any physical grounds (such as your office, parking lots, and walkways,) are easy to access, free of debris, ice, or snow, and are as safe as possible. Workers compensation insurance will need to be tapped into if someone hurts themselves while on your property, so bear this in mind as you go!

Address claims quickly and compassionately

Whenever the unthinkable happens despite the best laid  plans, you can help to minimize the impact on your workers compensation insurance rates in a number of different ways. Make sure that the employee gets the medical help they need immediately, and make sure that their expenses are paid accordingly. Minimize the need for lawyers to get involved, make it as easy as possible for the employee in question to recover and return to work, and show genuine concern all the way through. This should help keep your workers compensation insurance rates reasonable throughout the life of your business.

In short, make sure that you look over your workers compensation insurance rates closely, itemize what you are paying per employee and why, and take all necessary steps to help your employees realize that their safety is priority number one!

Need help with reducing workers compensation costs? Contact American Insuring Group today to learn more.

When looking for commercial vehicle or van insurance in small to large towns from Reading to Philadelphia and beyond, there are a few points to consider, and some tend to get lost in a potential insurance minefield – here are a few frequently asked questions many ask when searching for the right insurance for their small business.

Is it hard to insure a vehicle for commercial use?

Not really. Anyone can apply to insure a commercial vehicle, (for example, a van), but they will find they are restricted when it comes to personal or private use of that vehicle. As long as the vehicle falls under commercial use, like delivering goods or providing a service (say, if the owner is a builder just using the van to get from A to B) then it is much easier to obtain insurance than if the applicant also wanted the vehicle for private use.

Define ‘commercial vehicle’?

Not sure if your vehicle falls under the right guidelines? Here are the main types of commercial vehicle:

• Goods-carrying vehicles: this is the most common type of commercial vehicle, used to transport products or necessary items for services. This can range from small cars and vans to larger trucks.
• Passenger-carrying vehicles: this applies to buses, coaches, and hire cars.
• Forestry and agricultural vehicles
• Special construction vehicles: vehicles that serve a particular purpose are known as ‘special types’ of vehicle and apply to ambulances, fork-lift trucks, and cranes.

What about windshield coverage?

Windshield coverage usually comes down to the insurance company and the level of coverage taken out, but this type of coverage is typically available for commercial vehicles as a policy extra, under "Comprehensive" coverage.

How can I lower my van insurance premium?

There are a number of ways that some companies do this, but here are three ways for customers to reduce their premiums:

• Usage - how the vehicle is used can lower your insurance premiums.  If you park the van at one jobsite for the day will be a lower cost than if you travel to mutiple locations during the day.
• Safe drive Badge – a simple sticker on the back saying ‘How’s my driving?’ with a number on the back (preferably to the insurance company) will also reduce premiums. This is because anyone driving dangerously will obviously be reported by other drivers, hypothetically making the driver in question more cautious about their driving.
• Driving Convictions – this is a simple one; don’t acquire any speeding convictions. Insurance companies tend to ramp up the premiums for people who have previous driving convictions. 

Get Help - Get the Right Commercial Vehicle Insurance for Your Car, Van, or Truck

Workers Compensation Insurance - A Potential Minefield

Purchasing workers compensation insurance can be a potential minefield for some businesses, who often don’t know where to start and can feel like they’re going in blind without a workers comp specialist to guide them along the way. It can seem like a daunting, upward struggle, especially since some insurance companies and agents won’t even consider writing workers compensation insurance – and they have their reasons - but with the right insurance broker, applicants can get through the process scratch-free. 

Choosing the Right Insurance Broker

It’s also important to note that purchasing workers compensation insurance from a business insurance agency with several markets available, is the best way forward for business owners looking for this type of insurance. At American Insuring Group LTD, we represent a number of A rated insurance companies that specialize in Workers Compensation insurance.  

Never Let Your Workers Compensation Insurance Lapse

The most important thing for business owners to remember is to never let their workers compensation insurance lapse, as that could lead to disastrous results. Although financial issues may seem dire, it’s likely clients will pay the price if they let their workers comp lapse, in the form of considerably higher premiums on re-application. The other obvious advice is to always pay premiums on time, as late payments could cause standard carriers to write off a client with a non-renewal notice – almost as bad as a lapse in coverage.

Re-application

If workers compensation insurance is allowed to expire and business owners go through the re-application process, they should be aware it’s not going to be easy – they’ll likely be bombarded with seemingly endless documentation in order to explain the expiration in the first place. Anyone finding themselves in this situation would be wise to save their sanity and consult an insurance broker or expert to help get them through the paper trial and advise them on the situation.

Claims can also be an issue. If a business has filed numerous claims with an insurance broker, then they are likely to get issued with higher premiums; that’s just the way insurance, as a whole, works.

Conclusion

When applying (or re-applying) for workers compensation insurance, business owners should work closely with an insurance broker. Ask questions, and be sure to find a broker who instils confidence. One last thing to bear in mind is the fact that all workers comp quotes are custom, with no ‘big rate books’ like the ones life insurance agents are familiar with. 

Get Help with Workers Comp Insurance

Have additional questions about workers compensation insurance? Contact us, or request a free, no-obligation workers compensation insurance quote. We'll compare policies and prices from competing carriers to make sure you get the right coverage at the right price.

Is Affordable Care Affordable, or an Incentive to Raise Health Insurance Premiums?

A section of The Affordable Care Act requires health insurance providers to spend at least 80 percent of dollars they receive from premiums on patient care, or be forced to send a rebate to patients. This may seem like a good deal for patients, but health economists say the provision can only lead to more expensive insurance.

Economists reason that the provision merely provides an incentive to raise premiums, instead of encouraging companies to control costs. While patients may be thrilled to receive a rebate in the mail, this rebate will be a small consolation for the inflated premiums patients will have to pay as insurers let spending balloon.

Health Insurance Rebates Lead to Higher Premiums

According to Peter Suderman's Hit and Run blogpost "ObamaCare's Health Insurance Rebates May Make Insurance More Expensive," insurers rebated slightly over $1 billion this year, at an average of $151 per customer, in letters that clearly stated the rebates were coming as a result of reforms made under the Obama administration. This politically sound move lets patients know exactly where their rebates are coming from. What it doesn't tell them is that the rebates might cause premiums to rise.

"It's easier to cover someone's health costs on 80 percent of $1,000 than it is on 80 percent of $100," Suderman writes, "and because insurer profits and other administrative costs must come from the remaining 20 percent, there's a larger pool from which to draw profits and business expenses." In other words, insurers will be motivated to raise their premiums in an attempt to cover expenses.

Economists Doubtful of Benefits

NPR's Planet Money reported on the likely outcomes of the insurance rebates provision. Reporter David Kestenbaum interviewed six health economists. "No one thought the provision would do much good," he said, "and several thought it could be harmful." Among the economists interviewed by Kestenbaum was Jonathan Gruber, an ObamaCare architect and supporter.

Skewed Coverage? NPR Story Differs from ABC, CBS, USA Today

The press has widely lauded the health insurance rebates. ABC News reported that the law is "aimed at holding health insurance companies accountable for how they spend the money collected through premiums." CBS and USA Today ran similar stories, equally positive about the program that would force insurance companies to spend more on patient care or send out rebates. None of the articles mentioned that premiums would likely rise as a result of the provision. NPR's Planet Money was the first news platform to explore the potential pitfalls of the rebate program, and stumbled on a major flaw: more money spent on patient care will logically result in higher premiums.

Need help in acquiring a sensible health insurance plan for yourself, your family, or your employees? Click below to learn more about your health insurance policy options.