WORKER'S COMPENSATION INSURANCE

Worker's Compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort (legal fault) of negligence. The trade-off between assured, limited coverage and lack of recourse outside the worker compensation system is known as "the compensation bargain." One of the problems that the compensation bargain solved is the problem of employers becoming insolvent as a result of high damage awards. The system of collective liability was created to prevent that, and thus to ensure security of compensation to the workers. Individual immunity is the necessary corollary to collective liability.

While plans differ among jurisdictions, provision can be made for weekly payments in place of wages (functioning in this case as a form of disability insurance), compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance), and benefits payable to the dependents of workers killed during employment.

General damage for pain and suffering, and punitive damages for employer negligence, are generally not available in workers' compensation plans, and negligence is generally not an issue in the case.

BUSINESS LIABILITY (OR OWNERS) INSURANCE

Business liability insurance protects a company and/or business owner in the event of a formal lawsuit or any third-party claim. Coverage includes any financial liability incurred in addition to expenses related to the company's legal defense. There are three main types of business liability insurance: general liability insurance, professional liability insurance, and product liability insurance.

Breaking Down Business Liability Insurance 

Small business owners – especially partnerships and sole proprietorships – put their personal finances at risk in the event of a business-related lawsuit. Even under a limited liability corporation (LLC), an owner could still be exposed to personal risk. Business liability insurance provides greater financial protection than is offered by any legal structure. 

Business liability insurance protects a company’s assets and pays for legal obligations, such as medical costs incurred by someone that gets hurt on company property. It also provides protection against property damage or injury caused as a result of action by the company or its employees, operating on behalf of the company. Liability insurance also covers the cost of legal defense and any settlement or award if a lawsuit is judged against the company. Such associated costs include compensatory damages, nonmonetary losses suffered by the injured party, and punitive damages. General liability insurance protects against any liability a business has as a tenant for damage to rented property, such as by fire or other covered loss. Business liability insurance also covers claims of false or misleading advertising, including libel, slander, and copyright infringement. 

Businesses with higher risks that exceed the coverage conventional business liability insurance may opt for the excess of loss reinsurance or umbrella insurance that increases coverage limits. This will cover an organization for situations that may not be covered by conventional liability coverage. It will also ensure all costs are covered should someone file and win a claim against the business.

Determining Business Liability Insurance Costs 

The type of business should determine coverage levels under coverage and its perceived risks. For example, a building contractor will need more coverage than a writer. The business location also factors into the costs. For example, some states award more in damages to plaintiffs for personal injury than others.

Businesses that fall into the lower risk category may want to consider a Business Owner’s Policy (BOP), which combines general liability and property insurance at a more cost-effective rate. Any new or additional business liability insurance policies should contain an exclusions clause to minimize cost by avoiding duplications of coverage provided in other policies and/or to eliminate unneeded coverage.

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