Every good employer spends time evaluating, analyzing and determining the best solution for the problems, or risks, in business. This process is called mitigating risk or more simply, risk management. In today’s fast-paced and highly litigious society, no savvy business owner will operate without General Liability (GL) insurance coverage to protect his or her business operations, as well as workers’ compensation insurance to cover work-related injuries or illnesses.
No financial institution, building leasing office, state licensing agency, or any construction project manager will look your way if you cannot present a certificate of coverage. Proof of coverage is required before you are even considered. Not only must you have the appropriate insurance, there are several ways that your insurance (risk protection) must measure up. For example, more and more project owners require that workers’ compensation coverage is provided by an A-rated insurance brokerage firm, and that your coverage amount meet the national statutory limit of $1,000,000.
In addition, a large number of certificate requests include the requirement for project owners and all related parties to be waived from the possibility of subjugation (legal action). Obviously, insurance providers have noticed this trend and have begun to charge a minimal fee to provide this endorsement to policies. Although minimal, at $200-$600 each (cost is regulated by each state), it can stack up over time and cause a lengthy waiting period for those who are in a hurry to close a deal. Employers, these fees are basically designed to give us the courage to push back on this very rarely used requirement.
If you’re wondering whether you are adequately covered under your GL policy, an important addition is Employment Practices Liability Insurance (EPLI). This coverage captures alleged discrimination, harassment and wrongful termination. Be sure to discuss the specifics with your provider, particularly based on your particular industry. Keep in mind that all endorsements are not created equal, meaning they are not automatically covered, (e.g., employee dishonesty, etc.).
Hosting a holiday party for employees this year? Liquor laws are being expanded to include accountability for employers who serve alcohol to their employees, who may ultimately cause automobile accidents.
It is more than just a good idea to manage your risk within your business. In many cases, it is the law…and in all cases, it will allow you peace of mind and ease of operations while protecting your interests.
Businesses that utilize a Professional Employer Organization (PEO) can rest assured that the PEO’s Risk Management team and Client Service team will make sure that the company has all of the appropriate coverages and policies in place. Look for a PEO that holds Workers’ Compensation Risk Management certification from the Certification Institute. Even better, ESAC accredited PEOs offer additional assurance for their clients, similar to those offered by the FDIC for the banking industry.
Contact the author directly at email@example.com. This is the twenty-ninth post in our 30 Days of HR Outsourcing series. Visit us each day in November for information on HR, payroll, benefits, workers’ comp and risk management topics, or subscribe to be notified instantly when a new post is published.