Business Owners Policy Insurance And Workers Compensation Insurance: Which Do You Need For Your Business?
If you own a small business, you may find yourself wondering what type of insurance is needed to protect your business and the money you have invested in to it. Many people make the mistake of purchasing only a business owners policy, or BOP, or workers compensation insurance, when they may need both policies or the opposite one they purchase. Here are a few of the factors you need to consider when determining which type of insurance policy you need for your business.
If You Have Employees
If you have any employees, you are required by law to either carry workers compensation insurance or post a bond with the state to cover expenses related to an injured worker. The bond amount varies based on the state you are in and the industry your business is related to, but is typically quite high, so most people opt for workers compensation insurance. If you do not have any employees, and only have partners that work for or with you, you are not required to carry workers compensation insurance.
If You Want to Insure the Business Owners
Most workers compensation insurance policies only cover employees from injury that occurs during the scope of employment. Typically, business owners or partners are excluded from the policy. Unfortunately, this means that if a business owner is injured on the job, they may be unable to work. This affects not only the income of that business owner, but also the productivity of the business who relies on the owner to do a job. Business owners policy insurance helps to provide lost income to the injured business owner, while also providing the business with money to hire someone to do the job that the injured party is no longer able to do, helping the business to stay afloat.
If You Have Independent Contractors
BOP insurance covers many different things, including business property and business liability. It offers many protections that small business owners need, all rolled up into one policy. If you have independent contractors working for you, they likely do not met the criteria to be covered under a worker's compensation policy. Typically, they are required to cover themselves in the event of an accident or injury at work. However, it is not unheard of for an independent contractor to sue a business owner for those injuries that occurred during their employment. A business owners policy covers you against the lawsuit and any money that the injured party may win in a lawsuit. As such, it is highly recommended that you have BOP insurance, not workers compensation insurance, if you use independent contractors.
Trying to decide what type of insurance coverage you need. If you are unsure as to whether you need workers compensation insurance, business owners policy insurance or both, talk to your insurance agent. They can help you figure out which policies will best help to protect your small business