Understanding Risk Management
Risk management covers a wide range of business functions including; business legal entity selection and maintenance, insurable areas, safety management, financial accuracy and theft protection, employee actions, and more
Insurable risks of loss
The fact that your business is a limited liability entity helps manage risk to other assets but does not relieve you from certain legal insurance requirements. The following insurances represent the basic types of insurance required.
Public Liability Insurance:
Your business may also need to carry some form of public liability insurance if there is any possibility that the general public could be injured by one of your workers or by operations of your business. You may also want to insure against unintentional destruction of customer property.
Worker's Compensation Insurance:
All businesses that have any kind of worker(s) are required BY LAW to carry WORKERS COMPENSATION insurance.In some cases this insurance can be waived by the owner, however, careful thought should be given to this waiver.
Worker does not mean only employees, the term worker means any worker including the owner. If your business will hire independent contractors it must make sure that those contractors have worker’s compensation insurance or a legal waiver before they can begin any work for your business. If they do not have such insurance, you MUST insure them under your policy.
Worker’s compensation insurance companies make annual audits of insured businesses to verify the amounts paid to employees and uninsured independent contractors.
Unemployment insurance is usually included as a payroll tax but is in reality another form of insurance. This insurance provides for unemployment payment at times of lack of employment due to layoff or elimination of the position.
Product Liability Insurance:
If you manufacture any type of product, you should check into PRODUCT liability insurances.
Errors and Omission Insurance:
This insurance covers unintentional mistakes in contracts and agreements.