10 Types of Insurance a Small Business Owner Should Apply for in Ohio

Insurance policy

Types of insurance for your business

If you are thinking about starting a business in Ohio, then these are the types of insurance you are going to need.

Keyword(s): Small business insurance, small business owner in Ohio

Whether you plan on putting together a startup or you’ve owned a small business for a while now, insurance is something that will probably be on your mind and rightly so. After all, all business owners, (even those who are starting out) need to get the right coverage so that they are able to protect their business and their employees.

Here, you are going to find out about the types of small business insurance.

1. Worker’s Compensation

One of the most important insurance policies you can take out for a business is worker’s compensation insurance. Most employers need to carry this type of insurance in case their employees get hurt or injured on the job. Failing to get workers compensation insurance could easily result in fines and possible criminal penalties as well.

Workers compensation comes in handy to pay for medical expenses and to pay the injured employee with the portion of their wages during their recovery. Furthermore, if an employee sues the company for a work-related injury, the workers comp will pay for the defense of the lawsuit. Workers compensation insurance can be purchased from either a private carrier or a broker.

2. Unemployment Insurance

This is another type of insurance that’s required by the government. As the name implies, unemployment insurance will provide a cushion for the employees if they lose their job or are terminated. The only difference between workers compensation insurance and unemployment insurance is that the latter cannot be purchased from an insurance provider.

So, how do you get it?

Rather than signing up for it separately, employers pay federal unemployment taxes along with state unemployment taxes. The state then administers the unemployment insurance program for employers. The amount of tax you have to pay as part of the FUTA or SUTA will depend on the number of employees you have in your business and employee turnover. The HR software of a company is usually used to make calculations on how much FUTA and SUTA a company has to pay.

That said, it is important for new business owners to contact the unemployment agency of their respective state to sign up and get more information about unemployment insurance. Employees who are laid off or terminated can then apply so that they can get the benefits of unemployment insurance. This is preferably done as soon as you hire your first employee.

3. Disability Insurance

This type of insurance pays a guaranteed amount of money to the employees which is a percentage of their total monthly income in case they are unable to work due to an injury or disability. Unlike the specific requirements of the workers compensation, the injury or illness does not have to be work-related for the employee to get benefits. A good example of disability insurance is pregnant employees who are eligible to receive the benefits soon after giving birth.

While currently, there are only a hand full of US states that require employers to offer some level of disability insurance, even if your company is not operating in those states, offering some form of disability insurance (between 0.25% and 0.50% of a payroll) will give you peace of mind knowing that your employees will be taken care of if they are injured or fallen ill.

4. General Liability

While a business is not required to purchase this type of insurance, it is usually a smart decision to take out a general liability insurance policy just in case. Picture this – a third party such as a client, customer or vendor gets injured on your company’s property while using your products or services. In this scenario, a general liability insurance policy can provide coverage for physical injuries, damages done to property while carrying out your work or injuries relating to libel or misappropriation.

This makes a general liability insurance policy a must-have for businesses regardless of their size, especially if there’s an increased chance of people being injured in your business due to the products or nature of the work. Some businesses that commonly use a general liability insurance policy are construction businesses, production and manufacturing businesses, and landscaping businesses.

5. Commercial Property

The idea behind this type of insurance is to ensure that all the equipment, inventory and other property, including your office space is covered against any loss or damage. This reason alone puts commercial property insurance at the top of the list of the insurances policies you need for your business in Ohio.

A commercial property insurance is also handy if your newly established business is robbed, vandalized or if it incurs any damage due to a fire or natural disaster. This type of insurance usually covers any unforeseen event from flooding to a burst pipe. That said, some policy providers might leave out certain natural disasters which is why you need to shop around to find yourself a commercial property insurance that is providing the coverage you need.

Business Interruption Insurance coverage is also used as a rider to a commercial property insurance policy and provides coverage against loss of income due to a damage to your property. For example, if your brick and mortar store is burnt to the ground, you will probably lose a lot of business while its being rebuilt. The Business Interruption Insurance will provide coverage in such a scenario.

6. Professional Liability

This type of insurance is also known as errors and omissions insurance. It is possible for any business to commit professional negligence, which is why a professional liability insurance can be useful. A good example can be given of a web design company that fails to provide the required website at the agreed upon launch date. This could result in the client losing lots of money and could sue you for their loss.

The professional liability insurance policy will help cover expenses in such situations. Regardless of your business type, if it has got anything to do with providing a service you will need to purchase this type of insurance.

7. Product Liability

This type of insurance is crucial to have for small business owners dealing in tangible products. The product liability insurance can either be purchased as an add-on to your general liability insurance policy or as a stand-alone policy. The major benefit of purchasing a product liability insurance policy is that it provides coverage for an entire lifecycle of a product. This means, if the manufacturer you hire makes a damaged product, the customer might sue you since it’s your brand. The product liability insurance will cover you in such situations.

8. Employment Practices Liability Insurance

This policy helps cover businesses against a slew of claims such as wrongful termination or racial and gender discrimination lawsuits that are brought against the company by your employees. While every small business owner in Ohio tries to maintain a workplace that’s fair, it doesn’t mean you can’t get slapped by such a lawsuit. Keeping that in mind, the employment practices liability insurance policy can be a god-send if you are looking for a way to resolve such lawsuits.

9. Key Person Insurance

This insurance policy has been designed so that your business may stay afloat after you’re gone. While as a small business owner in Ohio, you might not be thinking about it, smart business owners are always prepared to meet any situation. The key person insurance policy does not only have to be for the owner. For instance, if a key individual such as a senior executive in your company is disabled or dies, the key person insurance makes sure your business doesn’t suffer as a consequence.

Oftentimes, businesses end up losing income and clients that the key person introduced to the company. Sometimes, it takes a long time for the company to recover from such loses. But, with the key person insurance policy in place, your business is going to receive a payout that will help keep it afloat should such a situation arise. One of the reasons why the key person insurance policy is useful is because the money you receive can be used to hire and train new talent to fill up the void, or take other necessary steps to help your business from any further damages.

10. Health Insurance

There are two types of health insurance policies that a small business owner in Ohio can choose from – individual health insurance and group health insurance. Here, we are going to take a closer look at these two types of health insurance.

  • Individual Health Insurance — This policy is purchased by individuals to provide health coverage either to themselves or their family members. Individual health insurance is a great option for a small business owner in Ohio, who cannot afford to pay for group coverage. This is mainly due to the minimal participation or minimum contribution by employees. Furthermore, since 2014, insurance providers have stopped declining individual health insurance for those who already have a pre-existing medical condition. At the same time, there are special tax incentives that businesses can avail by offering their employees individual health insurance.
  • Group Health Insurance — A group health insurance policy is a kind of coverage that’s sponsored by the employer. The costs of group health insurance coverage are normally going to be shared between the employer and the employee. It is also possible for the coverage to be extended to the employee’s dependents.

Four Types of Health Insurance Plans for Small Businesses in Ohio

If you are a small business owner in Ohio who is thinking about providing your employees with health insurance there are several options that you can take advantage of. The health insurance policies that are offered to small businesses in Ohio include:

  • PPO Health Insurance Plans
  • Indemnity Health Insurance Plans
  • HSA-Qualified Health Insurance Plans, and
  • HMO Health Insurance Plans

Needless to say, the type of health insurance plan you go with is mainly going to depend on the size of your business, the number of employees you have and the amount you are willing to spend. It is possible to find the best rates if you shop around while looking for a health insurance policy.

  • PPO Health Insurance — PPO stands for Preferred Provider Organization and is the most commonly used insurance plan by small businesses in Ohio. Under this plan your employees need to get their medical care from hospitals and doctors that are on the insurance provider’s list of preferred healthcare facilities.
  • HMO Health Insurance —This stands for Health Maintenance Organization and under this policy you can offer a wide range of health-related services to your employees, provided those facilities have been included in the provider’s preferred list. That said, those employees who take part in the HMO health insurance plan will have to name a primary care physician who will provide them with most of their healthcare needs, or refer them to other specialists if needed.
  • HSA-Qualified Health Insurance — These are basically PPO health insurance plans that have been designed to be used specifically along with a Health Savings Account or HSA. The HAS account is a special bank account where employees get to save money that is used for their future medical expenses. That said, employers normally go with Section 105 Healthcare Reimbursement Plans because of their many benefits.
  • Indemnity Health Insurance — This plan allows employees to have more freedom with regards to where they go for their health checkups. The participant will choose their own healthcare facility or doctor that they want to visit and the insurance provider will then pay a set portion of the charges. With this insurance plan, employees may have to pay for some of the services up front and get reimbursed by the insurance company later.

Bonus Info

A small business owner in Ohio should also sign up for the following insurance policies just in case.

Cyber Liability Insurance — If your business model requires you to carry out online transactions, then you will be exposed to hacks and breaches in security. Having cyber liability insurance can offer protection in the event of a security breach by helping you with the cost of notifying customers, national credit reporting agencies and other agencies. Cyber liability insurance can also help to pay for the forensic investigation that will be carried out after the security breach and will cover any legal expenses in the event that you are sued by a customer.

Commercial Auto Insurance — If your business owns vehicles then it should be covered under a commercial auto insurance policy. This will cover expenses relating to repairs of a company vehicle due to an accident, and the medical expenses of the driver and passengers in the other vehicle. It will also help cover for the legal expenses in the event that you are sued. Another reason why a commercial auto insurance should be mandatory if your company owns vehicles is because it will cover for any damage brought to the vehicles due to theft, vandalism or natural hazards.