What business insurance does a startup really need?

December 28, 2009 by Chris Baumli

And what can you reasonably do without?

In an ideal world entrepreneurs could afford a comprehensive insurance program that would protect you from any conceivable exposure. (I think this is the same world where you have unlimited funding, 48 hours in a day, and customers that would crawl over hot coals to buy from you)!

In case you’re not quite in that situation some important decisions have to be made. Make sure you make educated ones. Most companies that are bootstrapping don’t have the cash flow to transfer every risk via an insurance policy. So what insurance coverage does a startup (or any business for that matter) really need?

That obviously depends on your business. We need to make sure you diagnose before you prescribe. The first step is to start with an assessment of potential risks. This process helps uncover a range of issues including regulatory compliance, risks associated with employees, potential third party liabilities, property risk, contractual risk, and threats to net income.

Once this assessment has been completed (and you’ve had a chance to practice some of those breathing exercises… you know… the ones that are supposed to calm you down and reduce your blood pressure) you can then, with the help of a Certified Insurance Counselor, make educated decisions that will help prioritize these exposures and help answer the following questions:
Which risks pose an immediate threat?

Which risks are the most likely to occur?

Which risks would be the most severe?

Which risks can we afford to retain or self insure?

Which risks can be reasonably be avoided?

Which ones can be mitigated or reduced?

Which ones can be transferred contractually?

What risks do I need to transfer via insurance?

Insurance is only one piece of managing risk and protecting your business. Other avenues should be explored before blindly buying an insurance policy.

The good news is that getting professional help, (wait… that doesn’t sound quite right…), is available and in most cases costs no more than randomly buying insurance from someone over the internet. For more information or to get a primer on types of business insurance available go to General Liability Insurance Austin.

Manage your liabilities from hosting a holiday party

December 14, 2009 by Chris Baumli

In Texas, the host of a party can incur severe liabilities in the event that a guest gets intoxicated and then, heaven forbid, injures themselves or someone else because they got behind the wheel. Make sure you take precautions to prevent drinking and driving incidents.

cedar park insurance — Have a safe holiday season!

A couple of simple ways you can avoid these liabilities are:

Outsource the serving of alcohol. It’s a great idea to hire a bartender or catering company, who has undergone TABC training. Not only can this help limit the amount served, but the bartenders are trained to spot if someone is intoxicated and take appropriate measures. Make sure they carry general liability and liquor liability coverage. It’s a good idea to have them name you as an additional insured on these policies. (Some policies will allow this, but this is not always an option).
Designated drivers made easy! Remind guests to use a designated driver in the invitation and as they are leaving the party. There are services such as Zingo who will have a driver ride out to you on a foldable motor scooter and then drive you home in your own car. Rates for this are $20 plus a couple bucks for additional miles. You can call them 30 minutes before you’re ready to go at 877-OK ZINGO. That’s 877-659-4646 (OK, I translated this because it took me about a 45 seconds to decipher and dial the number at 10am this morning because I got the “O” and the zero confused so dialed the wrong number… I then had visions of some exuberant partygoer fumbling with the numbers trying to spell ZINGO on their blackberry in the middle of the night…)
Don’t over-serve your guests and don’t let someone drive who is visibly intoxicated. You don’t have to be a party Nazi to make this happen, just pay attention and if someone is over their limit call them a cab or find them a designated driver.
Insurance is a last resort! Insurance (risk transfer) and is not a substitute for trying to prevent, avoid and reduce any risks… especially this one. Even though most General Liability policies for businesses and most homeowners policies do provide some “host” liquor liability coverage” it is often limited and in the case of a homeowners policies the limits are typically way too low. This is not a road you want to go down so take some simple steps to avoid and prevent these risks!

With a little bit of forethought and awareness, we can all help prevent some potentially disastrous things from happening. Please pass this on to two friends as a reminder to be safe this holiday season and subscribe to this blog for more tips and ideas on how to protect your family and business. If you have questions feel free to shoot me an email at cbaumli@inspire-insurance.com or go to Austin Insurance.

Workers comp isn’t required in Texas, Do I really need it?

December 2, 2009 by Chris Baumli

Workers comp isn’t required in Texas, Do I really need it?

Texas is the only state in our great union that doesn’t require employers in some form to carry workers comp coverage. Is this good news?

I run across many Texas businesses that choose to go bare. I hear things like,

“Hey, my employees work in an office, what’s going to happen? If someone gets a vicious paper cut, I can write a check to the urgent care center. Problem solved, right?”

Educate Yourself on the Risks

Maybe. As long as you are comfortable with the risks. What else can happen to your office employees? Do they ever drive their own vehicles for business purposes? Ever drive to the bank to do a deposit or make a run to Office Depot? Ever go on a sales call? (I know after last quarter’s numbers you sometimes wonder, huh)? What happens if your employee gets in an at-fault accident and sustains serious injuries? Who pays for hospital stays, medications and lost wages if you don’t have Workers Comp? Well let’s see:

Health insurance? Nope. Automobile insurance? No again. General Liability? Excluded. You guessed it. You do!

A Risk Management Axiom

There is a risk management axiom that you should only retain the level of risk you can pay for. To throw in a little perspective on medical expenses, one of my ten year old twins recently had a little ER visit for doing a head-gravity-ground experiment while playing “touch” football. We were there for an hour and a half. The bill… Over $16,000! How much for a serious auto accident? Hundreds of thousands of dollars? More? Can you write a check for that?

Statutory Compliance

There are a couple of other issues you need to be aware of if you choose to go without workers comp coverage (this is called non-subscription). If you are a non-subscriber, then you are by law required to file a “Form 5” with Texas Department of Insurance every year. Failure to do so carries potential administrative penalties and fines. You can get a copy of a form 5 on the TDI website www.tdi.state.tx.us/ or shoot me an email at cbaumli@inspire-insurance.com and I’ll be happy to send you one.

The Realistic Risk

Perhaps the most realistic exposure to non-subscription is the cost of being sued by an employee for on the job injuries. Even if you are vindicated in court, you will still incur potentially substantial legal fees. Now my attorney is a nice guy, but at $300 an hour I tend to forgo the chit chat.

Furthermore if you are sued by an employee for negligence, then you are severely hamstrung in any legal defense you employ because your attorney will not be able to use many common law defenses that are typically critical in defending negligence suits.

The Solution

I’m sure this comes as no surprise, but yes, Workers Comp is a critical component of any viable business insurance program. Having part B of workers comp coverage in place, (called Employer’s Liability) in place prevents these lawsuits from happening because it is the sole remedy in all but a very few cases.

The good news is that the level of workers comp fraud has diminished over the last few years and rates have come down. In fact for office workers annual rates are as low as 35 cents per $100 of payroll. Make sure you are protected.

We’d love to hear from you at Workers Comp Austin, Texas.

Do Entrepreneurs Need Risk Management?

November 2, 2009 by Chris Baumli

Larger businesses have dedicated Risk Managers and even entire departments that diligently survey the landscape and come up with ways to mitigate risk. How much time do you spend performing risk management activities for your business? Do entrepeneurs and small businesses have less risk than larger organizations?

There is a school of thought that small businesses are actually exposed to greater risk than the big boys because they don’t have the balance sheet to withstand a major incident. So I’ll ask again… How much time to you spend on proactively managing risk for your business?

Yes, I know that entrepreneurial budgets don’t allow for a full-time risk manager. Even with budget constraints, there are myriad things you can do to protect yourself without breaking the bank. At the very least you need to be able to identify common exposures that face your business and then make an informed decision as to how to either avoid, mitigate or transfer these risks.

In most cases there are things you can do to protect yourself that won’t cost you a dime! And if you get connected with the right Risk Manager/Insurance Broker, they can not only assess and help you manage risk, but save you money by placing you in the optimal insurance program.

What business insurance does a startup really need?

Manage your liabilities from hosting a holiday party

Workers comp isn’t required in Texas, Do I really need it?

Do Entrepreneurs Need Risk Management?

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