Starting a New Business?

What types of insurance are most important to have when opening an office?

Business Owners

Property Insurance – Office property including furniture, equipment, computers, books, art, decorations. Covers against fire, theft, windstorm.

Commercial General Liability – Pays for Bodily Injury and Property Damage caused by you in the operation of your business.

Malpractice “Professional Liability”

People who provide professional services to the public, such as attorneys, may become legally liable for damages that arise out of human errors and omissions.

There are two basic types of professional liability:

Malpractice. This is a common term used when legal professionals make errors. For example, attorney drafts a purchase agreement that leaves out important contingencies. Deal falls through because the contract did not address certain issues that she/he should have included. Financial loss to his client is the result of this defect in the contract. Client then sues attorney for his mistake.

Errors and Omissions (E & O). This term commonly applies to mistakes made by members of a profession. For example, attorney who fails to see a contract clause which results in loss to a client.

Workers Compensation

• Covers the employer for injuries sustained by employees on the job.

• The premium cost is based on the amount of payroll.

• Kentucky requires all employers to provide workers compensation for employees.

Disability

Disability covers the loss of earnings of someone who is unable to perform the duties of their occupation due to an illness or injury.

Definitions involved include:

    1. Own Occupation
    2. Partially or Totally Disabled
    3. Return to Work Provision
    4. Waiting or Elimination Period

Health

• Health insurance provides for payment of medical care of the employee and their dependents.

• Limited marketplace in Kentucky/Ohio

• Key considerations: Health of group, pre-existing conditions, tolerance of deductibles, Consumerism

• Solutions: PPO, HSA, Individual health insurance vs Group Insurance

Life Insurance

• Buy – Sell

• Partnership agreements

• Debt repayment (Mortgages, student loans)

• Protection for family

How do you determine your limits of coverage?

• General Liability

• Property

• Professional

• Disability

• Health

• Life

Common Pitfalls to the insured and how to avoid them

Underinsured

• Property Insurance. Insurance to value is key. For building coverage, obtain replacement cost calculation.

• For personal property, obtain an inventory

• For art, or other items with a subjective value – obtain appraisals

Risk Management vs. Insuring

• Property – Locks, Alarm Systems, Lighting, Cleanliness, Fire Extinguishers

• Liability – Maintenance of premises – handrails, snow removal

Typical cost for an office earning less than $500,000 of income

CASE STUDY: Newly established law practice with two attorneys, one paralegal and one secretary renting an office space.

Business Owners Policy:

• $75,000 Business Personal Property

• $1,000,000 General Liability Coverage

• $500 Property Deductible

• Price for coverage: @ $650.00 annually

• Professional Liability

• $1,000,000 Liability Limit with $5,000 Deductible

• Price for coverage: @ $1500.00 annually

Workers Compensation:

• Payroll Basis: $60,000 ($40,000 to paralegal, $20,000 to secretary)

• Price for coverage: @ $400.00 annually

• Disability

• $5000 monthly benefit with 90 day elimination period

• Benefit payable to age 66

• Price for coverage: @ $720 annually

• Health

• Group Health for group of 4

• Assuming average health and average age of 28

• Price for coverage: @ $600 per month

adkisson insurance agency, inc.
1885 dixie highway, suite 320
fort wright, ky 41011
phone: 859.341.2663
fax: 859.341.8323
info@adkissoninsurance.com
office hours: mon-fri 8:00am to 4:30pm

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