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Frequently Asked Questions

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Workers' Compensation

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Why do I need workers’ comp insurance?

In most states, the law requires most businesses having one or more employees to have workers’ compensation insurance. In fact, many states employers are required to post notice somewhere in the workplace advising employees of the identity of the insurer and how to report a claim. Employers can be fined for not carrying workers’ compensation insurance and stop orders can be issued, depending on state labor commissions, preventing employers from using employee labor until coverage is obtained.

What is covered in a workers’ comp policy?

It depends. The insurance benefits provided by a Workers’ Compensation policy are regulated by each state, thus, they may differ in each state in which you operate. A workers’ compensation policy provides coverage for lost wages, medical expenses, rehabilitation expenses, and death benefits resulting from an employee’s injury or illness that occurs due to the job. Incidents can range from sudden accidents to work-related illnesses/injuries that happen over time. Covered medical expenses can include hospital care, surgery, doctor visits, physical therapy, emergency room visits, prescription medication, etc. When an employee is unable to stay at (or return to) work, replacement income can be provided.

Are all on-the-job injuries covered by workers’ compensation coverage?

In general, workers’ compensation policies cover most, but not all, on-the-job injuries – even when an injury is caused by employer or employee carelessness. However, injuries that happen because an employee is intoxicated or using illegal drugs are most likely not covered. Other examples of injuries that may not be covered are injuries suffered when an employee was not on the job or injuries suffered when an employee’s conduct violated company policy. The rules vary widely state by state, and rules can be changed from time to time.

If I use contractors instead of employees, do I still need workers’ compensation insurance?

Contracted workers, leased workers, and some other hiring situations may be exempt from workers’ compensation requirements. However, laws differ from state to state and some require companies to provide coverage for contractors.

How important is it to correctly identify industry type in determining Industry Classification?

Really important! If the type of business is improperly classified, a business owner could pay significant additional premium at the end of the policy term. The workers’ compensation industry uses a standard set of three- or four-digit “classification codes” assigned by either a State Rating Bureau or the National Council on Compensation Insurance (NCCI) depending upon the state. Each code reflects the risk associated with the duties or “scope of work performed” for employees at a particular type of company. As a result, this classification is the basis for the workers’ compensation insurance rates assigned to that job. Incorrect industry identification generally means the premium charged is either higher or lower than appropriate, resulting in a large workers’ compensation premium payment, or credit due, when the policy’s mandatory premium audit is conducted.

How is the cost (the premium) of a workers’ compensation policy calculated?

The price you pay is based on many different factors including your payroll, the kind of business you have, the job duties of your employees, and where your business is located. In a simple example, what typically happens is that your industry class is determined, your payroll is multiplied by the “base rate” approved by your state’s department of insurance, and then, the result may be adjusted for several factors, including prior claims experience, risk characteristics such as a safety program or training program, or in some states a factor could be where you are located in the state.

What is meant by Annual Employee Payroll?

Annual Employee Payroll is a technical term which refers to the annual amount paid to all of your employees (both full and part time), including W-2, 1099, and cash wages. In other words, the amount does include wages, commissions, bonuses, overtime pay, and holiday/sick/vacation pay. Annual employee payroll does not include tips, severance pay, overtime pay above and beyond regular rate of pay (this may vary state to state), payroll limitations, and any salaries of Executives, Officers, Owners, and Partners who elect to be excluded from coverage.

Why is workers’ compensation an “auditable” policy?

In short, these policies are auditable (meaning they are subject to confirmation of things like annual employee payroll) because changes happen within businesses throughout the year that can impact the cost of the insurance. A workers’ compensation premium audit will be performed after each policy period at an insurer’s discretion to verify payroll, class codes, and perhaps other factors (such as subcontractor exposure) depending upon the class and the laws of each state. A variety of methods can be used (phone calls, mailings, or in-person visits to your operation), though the goal is always the same – to find out whether the payroll and class codes used to determine your premium accurately reflect the payroll and scope of work performed during the policy period. For certain classes, audits also ensure that subcontractors had their own coverage in place. If not, you may be charged for their exposure on your policy as well.

What is an Experience Modification (“MOD”)? How is a MOD determined?

An Experience Mod (sometimes called a “MOD” or “X-MOD”) is an adjustment or modification to the pricing of your coverage that is specific to a particular business, and is based upon your previous claim experience as compared to other businesses of the same size and scope of operations. This factor helps determine your rate and your policy premium. Generally, a business must be in operation a minimum of three years and have generated sufficient premium in a single year for a MOD to be assigned. Since MODs are unique to each business, the organization that calculates the number (either NCCI or the state’s Workers’ Compensation Bureau) will associate the factor with the' + " Employer’s individual Federal Employer Identification Number (FEIN). The MOD is determined by comparing your loss (claims) data to that of other employers with the same classification codes and is expressed as either a credit or debit on your policy. In general, a MOD that is less than 1 is better than average (and earns a credit); while a MOD that greater than 1 is worse than average (and earns a debit).

If my spouse and I are sole owners of our business and we do not have any employees, do we need workers’ compensation coverage?

While the rules vary from state to state, coverage for sole owners is generally optional. However, you need to have workers’ compensation insurance for any employee you may hire – even when you have just one and/or that person is hired on a temporary basis.

General Liability

How much does general liability insurance cost?

Our policies start under $30 a month, but the actual amount you will pay depends on your industry, size, number of employees, location, and other factors.

Is general liability insurance required by law?

Unlike workers’ compensation insurance, general liability insurance is not legally required. However, general liability insurance typically is required by contract by people with whom you do business, including vendors, owners of buildings in which you operate, etc.

How much general liability insurance do I need?

Insurance requirements vary based on the type of business, size, number of employees, etc. In many cases, if someone you are doing business with is requiring you to obtain general liability insurance, they will have minimum per-occurrence and aggregate limit requirements.

What is the difference between general liability and professional liability?

General liability insurance offers protection if someone outside of your business sues you for physical injury, property damage, or an advertising injury (libel/slander). Professional liability insurance (also called errors and omissions insurance) covers you if you are sued by a client who claims you made an error, omission, or other professional mistake that resulted in a financial loss. While general liability insurance is relevant to almost all businesses, not all need a professional liability policy. 

Property & Liability (BOP)

What type of coverage is provided under a Business Owner's Policy (BOP)?

A Business Owner’s Policy (BOP) provides both general liability and property coverage for your business. It protects against the loss of personal property, property damage to buildings, and liabilities faced in the course of business activities. Additional coverage is included in our basic BOP that provides additional security, including protection against loss of business income. Depending on your type of business, you may find that we suggest other possible coverage add-ons, along with explanations about what they provide, so that you can make an informed decision.

What’s the difference between a Business Owner’s Policy (BOP) and Package Policy?

Both policies can provide similar coverages, but for businesses of different sizes. The BOP policy was designed for a simple purchasing process for small to mid-size businesses. It provides basic general liability and property coverage can be customized with other coverages to meet the needs of specific businesses. A package policy, on the other hand, is designed for larger or more complex businesses and requires that most coverages be individually selected based on the needs of the business.

Why should I insure my building and business personal property to their replacement value?

The most you can be paid for covered loss under the policy is the value for which you insure your property. If you insure your property for less than the replacement value, you may not recover your full damages in the event of a loss.

Furthermore, your Business Owner's policy requires that you insure your Business Personal Property (BPP) and Building (if covered by this policy) for at least 80% of the cost that would be incurred to replace the property.

This requirement applies to any loss, full or partial. If your building is not insured to 80% of the full replacement value at the time of loss, your loss payment will be reduced to the greater of the actual cash value of the damaged property or a pro-rated portion based on how far below the 80% requirement you insured the building.

To avoid problems like this, it is best to insure your building and business personal property for 100% of the replacement value.

If you require building coverage, we provide you with an estimate of the full replacement cost value of the building during the quoting process. This is only an estimate, and the data may not be complete or sufficiently capture the unique nature of your property. Please call us at the number at the top of this page if you have any questions regarding the value of your property.

What if the building I own or occupy becomes vacant or partially vacant?

A vacant building presents different insurance risks than an occupied building. Your Business Owner’s policy contains a provision which may limit the loss payment if your building becomes vacant.

If you are a tenant rather than an owner of the building in the building in which your business operates, it will be considered vacant if it does not contain enough business personal property to conduct customary operations. If you are the owner of a building, at least 31% of the building must be rented and used by a lessee or sublessee to conduct their customary operations or used by you to conduct your customary operations, otherwise it will be considered vacant.

If the building where loss or damage occurs has been vacant for more than 60 consecutive days before loss or damage occurs, the following causes of loss may be excluded: vandalism, sprinkler leakage, building glass breakage, water damage, theft, or attempted theft. In addition, all other causes of loss may have their payments reduced by 15%.

Please call us to discuss your coverage options if you feel your building may be considered vacant.

How is my Business Owner’s Policy (BOP) premium determined?

Our actuaries have determined our rates based on the type of business being insured, and the coverage being provided, as well as other factors which affect the risk. Examples of such additional factors for property coverage include whether the business property has a fire or burglar alarm system; the type of construction of the building insured; and the distance between the building insured and the nearest fire hydrant or fire station. Consideration of factors like these gets us to our final rates. We then apply the rates to limits being purchased to arrive at your property premium. A similar process is done to determine the rates for liability, which are applied to the square feet your business occupies, payroll, or gross sales depending on the class of business you operate to arrive at your liability premium. These property and liability premiums are then combined to determine the BOP premium quote.

What additional coverages are included in my Business Owner’s Policy (BOP)?

  • Accounts Receivable
    Replaces amounts due to you that cannot be collected because your accounts receivable records were lost or damaged during a covered event.

  • Appurtenant Structures
    Covers incidental structures located on the same premises as the main building such as storage buildings, carports, or garages.

  • Business Income and Extra Expense
    Covers the loss of net income as a result of damage or loss of business property. Reimbursement for salaries, taxes, rents, and other expenses incurred during the period of interruption is typically included.

  • Damage to Premises Rented to You
    Insures damage to property you rent if your business is responsible for damages.

  • Electronic Data
    Covers the cost to replace or restore data that’s been destroyed or damaged by a covered loss.

  • Employee Dishonesty
    Covers loss resulting from dishonest or fraudulent acts of your business' employee(s), including theft of your property.

  • Fire Department Service Charge
    Pays for charges from a fire department for their response to save or protect your business from a covered cause of loss at your business.

  • Fire Extinguisher Systems Recharge Expense
    Pays to have your fire extinguisher recharged or replaced after being discharged, except during installation or testing.

  • Forgery or Alteration
    Covers loss resulting from the forgery of payment issued by your business, someone on behalf of your business, or by someone impersonating you or someone from your business.

  • Interruption of Computer Operations
    Covers lost income and extra expenses sustained in a suspension of operations due to destruction or corruption of electronic data by a covered cause of loss.

  • Outdoor Property
    Covers property outside your building (e.g. trees, shrubs or plants, signs - though not attached signs) for losses due to fire, lightning, explosion, riot or civil commotion, or aircraft (but not theft).

  • Preservation of Property
    Covers loss or damage to your property if it must be moved in order to preserve it. Coverage is provided while the property is in transit and at the new location for up to 30 days after the move begins.

  • Valuable Papers and Records
    Covers the cost to research, replace, or restore lost information on valuable papers and records (e.g. documents, manuscripts, books, deeds, drawings, or mortgages).

If I have a loss and my business has to shut down for a period of time, how does my Business Owner’s Policy (BOP) help?

In addition to basic property coverage for your building and business personal property, your policy protects you against a loss of "Business Income" for a predetermined number of days and / or maximum dollar value.

What is my TIV?

The term TIV refers to Total Insured Value and represents the combined value of your Building and Business Personal Property.

Does a Business Owner’s Policy (BOP) include Auto coverage? Workers’ Compensation coverage?

No. Your Business Owner’s Policy can address your typical General Liability and Property insurance needs while offering a large number of extra coverages. However, you must obtain your Auto(outside of hired and non - owned automobile coverages) and Workers’ Compensation insurance separately.

How can I best see all of the coverages and limits included in my policy?

Your policy lists all your coverages and limits and premiums. The first few pages of the policy are called "declaration pages" and provide summary terms of your coverages and limits, and should serve as a useful overview of your coverage.

If I purchase a Business Owner’s Policy (BOP), do I also need a General Liability policy?

Typically the answer is no. A BOP provides liability coverage, and for most businesses, an additional General Liability policy would be unnecessary.

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