When starting your own business, insurance is an important consideration. Protecting your business investment with insurance minimizes the risks that can arise from unforeseen events, liabilities, and losses. Finding the right insurance for your business can be a difficult task. There are many variables that decide the right insurance for a small business. These include the business structure, business activities, location, whether or not you hire employees—just to name a few.
Whether you are just starting a business, hiring additional employees for the first time, or changing the structure of your business, you need to have solid information to make the right decisions. According to the U.S. Small Business Administration, most of the information on the Internet about business insurance is published by insurance companies and their agents. Because this information is written with their interests in mind, it can be frustrating and confusing trying to find accurate information on small business insurance laws and best practices.
We will look at the two fundamental types of insurance – commercial business insurance and employer insurance.
Commercial Business Insurance
Typically commercial business insurance is not required by law; however, it can be a very prudent decision to acquire sufficient business insurance to protect your assets against things like the death of your partner, a natural disaster, or lengthy litigation. Some people believe that structuring a business as a corporation or limited liability company negates the need for business insurance. Although these types of business structures protect the owner’s personal assets from business liabilities, depending on the business structure alone to protect your assets is no substitute for liability insurance. Commercial business insurance protects the business from losses. In some situations the law can require that a specific type of business activity be covered by some form of insurance. Here are the types of business insurance policies to look at for your small business:
• General Liability Insurance: This insurance has broad coverage and provides protection against the legalities that come with accidents, injuries, and claims of negligence (like a slip and fall complaint).
• Product Liability Insurance: This type of insurance is valuable if you are in the business of manufacturing, distribution, and wholesale or retail sales of a product. Product liability insurance will protect against financial loss as a result of a product defect that causes injuries.
• Professional Liability Insurance: If your business provides a service to a customer, this insurance will protect your company against malpractice, errors, omissions, and negligence in providing those services to your customers. Some state and territorial governments require certain professions, such as doctors and attorneys, to carry a malpractice policy.
• Commercial Property Insurance: Just as it sounds, this type of insurance covers losses and damage of company property due to many different causes. These will include things like fire, smoke, severe weather, and vandalism. "Property" usually includes lost income, business interruption, buildings, computers, company papers, and money.
• Home-Based Business Insurance: As a general rule, your homeowner’s insurance policy will not cover home-based business losses. In some situations you may be able to add on property damage riders to your policy to cover specific items of property, additional policies may need to be purchased in order to cover other risks like general and professional liability.
There is a wide variety of insurance policies available. It’s a good idea to discuss your individual business insurance needs with one of the risk management attorneys at BoltNagi PC.
Insurance Requirements for Employers
If your small business has employees, you are usually required by state law to pay for certain types of insurance. The key employee insurance requirements are listed below:
• Workers Compensation Insurance – Businesses with employees are required to carry workers’ compensation insurance.
• Unemployment Insurance Tax: If you have employees, you will be required to pay unemployment insurance taxes as set out in the Virgin Islands Unemployment Insurance Act and administered by the Virgin Islands Department of Labor, Unemployment Insurance Service.
• Disability Insurance – In the U.S., this type of insurance is not mandatory in the U.S. Virgin Islands. It is only if your business is in certain states (California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island). A business located in the U.S. Virgin Islands may purchase and provide this as part of your company’s employee benefits through commercial insurance companies.
If you need assistance determining the types of insurance needed for your business or any other corporate tax and business matters, contact the law firm of BoltNagi PC. BoltNagi PC is one of the largest firms in the United States Virgin Islands and has experienced legal professionals in small business and corporate risk management to assist businesses in the U.S. Virgin Islands. Please contact BoltNagi PC today.