Tag: small business

Business Insurance 101: What is a BOP?

By Anita Byer, Setnor Byer Insurance & Risk

A Business Owner’s Policy (BOP) is a pre-packaged bundle of insurance coverages that are available to eligible small- and medium-sized businesses. BOPs are designed to provide a number of essential insurance coverages in a convenient and cost-effective manner. BOPs typically provide:

  • property insurance to cover damage to buildings and contents;
  • business income (business interruption) insurance to cover the loss of income resulting from a covered loss that disrupts business operations; and
  • liability insurance to protect against liability claims for bodily injury and property damage occurring on a business’s premises or arising out of its operations.

Depending on the insurance company, additional coverages may be included in a BOP, or added for an additional premium, such as:

BOP eligibility requirements can vary significantly among insurance companies, but they are typically reserved for small- and medium-sized businesses, which generally have fewer than 100 employees and annual revenues of less than $5 million. BOPs may also not be available to businesses operating in specific industries or those with highly specialized or high-risk operations.

It’s worth noting that BOPs may not be the best option for some businesses, regardless of eligibility. Some businesses, for example, may need higher limits or broader coverages than those available in a BOP. There are also a number of coverages that BOPs do not provide, such as workers compensation, commercial automobile and professional liability insurance. Even with a BOP, additional insurance policies may still be necessary.

Since BOPs are customized insurance products, coverage options (limits, exclusions, etc.) can vary significantly among insurers. This can make it difficult to understand and compare various BOP options. Businesses should work with an experienced insurance agent. Contact us to learn how a BOP can provide an effective and affordable insurance solution for your business.

COVID-19 Paid Leave: When Does the Small Business Exemption Apply?

The Families First Coronavirus Response Act (FFCRA) requires paid sick leave and expanded family and medical leave for employees who miss work for specific reasons related to coronavirus disease 2019 (COVID-19). These requirements generally apply to private employers with fewer than 500 employees, but there is an exemption for employers with fewer than 50 employees. As you will see, this exemption is narrow and limited to very specific circumstances.

An employer with fewer than 50 employees is exempt from the FFCRA’s mandated paid sick leave or expanded family and medical leave requirements ONLY IF:

If both conditions are satisfied, the employer may claim the exemption for the requested leave, but ONLY IF an authorized officer of the business has determined that:

1. The requested leave would cause the business’s expenses and financial obligations to exceed its business revenues and would cause the small business to cease operating at a minimal capacity;

2. The absence of the employee requesting such leave would entail a substantial risk to the financial health or operational capabilities of the business because of employee’s specialized skills, knowledge of the business or responsibilities; OR

3. There are not sufficient workers who are able, willing and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee who is requesting such leave, and such labor or services are needed for the small business to operate at a minimal capacity.

To elect the exemption, the employer must document the fact that the required determination has been properly made. This documentation must be retained in the employer’s files and should not be sent to the Department of Labor. Employers have relatively broad discretion to determine whether providing the required paid leave would jeopardize the viability of their business as a going concern. However, the Department of Labor encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety.

To avoid costly violations of the FFCRA, employers should proceed cautiously when interpreting and applying the law’s exemptions. Employers should also consider Employment Practices Liability Insurance to protect against various employment-related claims. Please contact us to learn more about EPLI coverage.

Cyber Liability: A BIG Risk for Small Businesses

Did you know that small businesses experience cyber incidents at roughly the same rate as drivers experience car accidents? Though most of us would never go without auto insurance, a majority of small businesses don’t have cyber liability insurance coverage. According to the 2018 Small Business Cyber Insurance and Security Spotlight Survey conducted by the Insurance Information Institute and J.D. Power:

  • 10 percent of the small businesses surveyed suffered at least one cyber incident in the prior year.
  • The average cyber-related loss was $188,400. In 2016, the average loss was $73,000.
  • Nearly 60 percent of small businesses are very concerned about cyber incidents.
  • 59 percent do not have cyber insurance coverage.

The potential impacts of a cyber incident that most concern small businesses include:

  • financial loss (47 percent);
  • information breach / theft (35 percent);
  • reputation / brand image issues (14 percent); and
  • regulatory / governance and legal issues (4 percent).

According to the survey, businesses with cyber insurance often had similar coverages, including coverage for:

There is one last thing to consider if your small business still doesn’t have cyber insurance coverage. According to the survey, 97 percent of the insured small businesses that experienced a cyber incident indicated that their cyber insurance policies adequately covered their losses. Please contact us if you would like more information about insurance specifically designed to protect against cyber threats and data security breaches.

Did you know that small businesses experience cyber incidents at roughly the same rate as drivers experience car accidents? Though most of us would never go without auto insurance, a majority of small businesses don’t have cyber liability insurance coverage. According to the 2018 Small Business Cyber Insurance and Security Spotlight Survey conducted by the Insurance Information Institute and J.D. Power:

Florida Employers Will Be Paying Less for Workers’ Compensation Insurance in 2019

Great news for Florida employers! The Office of Insurance Regulation approved a statewide overall workers’ compensation rate level decrease of 13.8 percent for new and renewal policies starting January 1, 2019. This will be the second consecutive year that rates have gone down in Florida.

The rate decrease is due in part to declines in claim frequency resulting from safer workplaces, enhanced workplace efficiencies and an increased use of automation and innovative technologies. Reduced assessments and increased investment income also contributed to the rate decrease.

When combined with the 9.5 percent reduction that took effect January 1, 2018, Florida’s overall rate level will be nearly 25 percent lower in 2019. To offset this revenue loss, insurance companies may begin auditing employers to make sure employees have been assigned the correct job classification code.

Classification codes are used to categorize employees based on the type of work they do. Each code is assigned a rate that reflects the relative risk associated with that type of work. A higher risk means a higher rate, which ultimately means a higher premium.

A car dealership, for example, may have employees classified as salespersons. This may change if an audit reveals that these ‘salespersons’ also work in the dealership’s parts department. The rate used to calculate premiums for non-salesperson employees is nearly five time higher.

It’s unclear how aggressive insurance companies may be in conducting audits, but it’s something employers should be aware of. Please contact us if you have any questions about employee classification codes or want to discuss ways to lower your workers’ compensation insurance premiums.