Posted on May 16, 2014
Commercial insurance is a necessity in today's business world. Kansas business owners are financially responsible for their property as well as the people visiting and working for them each day. Taking steps to analyze business insurance needs will help protect valuable business investments and ensure that companies can handle any lawsuits or claims that might arise from accidents, theft or damage.
Kansas law only requires that businesses carry workers compensation insurance coverage. While general liability and property insurance are not required, they are the two most commonly held business policies since they protect business owners, their property and their assets from potential financial devastation should a claim occur. Package policies that combine two or more types of insurance provide more comprehensive insurance coverage while simultaneously reducing overall insurance costs.
Kansas Liability Coverage
Kansas liability coverage protects companies from the cost of injuries, deaths or property damage caused by company products, operations or employees. General liability will pay for medical expenses of injured parties, legal defense fees and any judgments or settlements of a claim. Two common types of liability coverage include:
· Premises Liability - pays for personal injury claims a business is legally responsible for such as a slip and fall on company property.
· Products Liability or Completed Operations - pays for claims resulting from bodily injury or property damage due to a company's products or completed work.
General liability only covers company employees if they cause harm to a customer or other third party, in which case coverage will pay for the damage or loss to the third party injured by employee. Employee work related injuries are covered under state mandated workers' compensation. Employment practices liability insurance will cover defending and paying claims arising from employee alleged harassment, discrimination or wrongful termination.
Workers Compensation Coverage
Workers' compensation insurance provides benefits to workers for any job related injury, disability or death. Kansas state law requires that all employers with gross annual payroll of more than $20,000 carry workers' compensation insurance coverage for their employees. The only exemptions to this law are for certain areas of agricultural production with annual payrolls of less than $20,000. Calculations for payroll include wages paid for workers in other states as well. The income of family members that work in the business is not included toward the $20,000 payroll requirement; however, if workers comp coverage is carried, those family members are included in the policy.
The cost of workers comp depends on the industry classification assigned by the insurance carrier. Kansas uses over 600 classifications for businesses so providing detailed information about company operations helps insurance companies assign the appropriate classifications. More hazardous industries typically have higher rates.
Uninsured businesses are subject to civil penalties equal to twice the annual premium they would have paid for insurance, or $25,000, whichever amount is greater. Failure to provide workers' comp is also a Class A misdemeanor.
For financial protection of property and business assets, commercial property insurance is certainly one of the most important types of coverage available. This coverage not only protects actual buildings but also business personal property inside the building. Should property damage occur in a storm, business property insurance will cover furniture, computers, equipment and valuable documents along with other building content and outdoor items such as signs or landscape.
Kansas business owners may choose from three types of property insurance:
· Basic Form - covers damage or loss caused by fire, wind, hail, lightning or explosions. Each loss that is covered will be specifically listed within the policy. This type of policy insures only specific losses.
· Broad Form - in addition to everything covered by basic, broad coverage adds additional causes to the policy. So companies may choose to have added coverage for roof collapse due to snow or flood damage from heavy rains.
· Special Form - often called an all risk policy, the special form covers all types of physical losses except for those excluded from the policy. As a more comprehensive type of coverage, the special form is often the most expensive since it covers more losses.
Companies may also choose how commercial property insurance will pay for damage or losses - either with replacement cost or actual cash value. Replacement cost pays for the cost of replacing damaged property with brand new items at today's value; whereas, actual cash value pays for losses after deducting depreciation from the value. In terms of premium, replacement cost insurance is usually more expensive.
Commercial Flood Insurance
Wind, hail and floods are common occurrences in Kansas. Therefore, business owners must take steps to prepare beforehand by making sure appropriate insurance is in place to cover damage from these weather related events. Because business property insurance does not cover flooding, commercial flood insurance should be part of every company's insurance programs. When rising floodwaters from heavy storms or snowmelt cause damage, a flood policy will compensate businesses for their buildings and personal property.
Many Kansas communities participate in the National Flood Insurance Program. This FEMA administered insurance program offers coverage of up to $1 million for commercial operations - $500,000 for buildings and $500,000 for building contents.
Crop Insurance for Kansas
As a major producer of wheat crops, Kansas is home to many farmers needing specialized crop and farm insurance to protect their livelihood. Should drought conditions, pests or falling prices negatively affect farm production, crop insurance provides the added protection to keep farms and ranches from financial ruin. Basic farm policies can include coverage for buildings, livestock, equipment, crops and refrigerated products. Weather related events can also be included for more comprehensive coverage to give security and peace of mind to farmers and ranchers.
Kansas Tornado Insurance
As anyone familiar with the classic Wizard of Oz tale knows Kansas is no stranger to powerful storms and tornadoes. These catastrophic events can completely devastate whole communities quickly and without warning. According to the National Climatic Data Center, the state averages roughly 55 tornadoes per year. Kansas business owners need to review their policies to make sure that they cover tornado damage and provide adequate protection should one of these powerful storms strike.
When tornadoes or any type of property damage temporarily closes business operations during repair or replacement, business income or interruption insurance allows companies to continue paying the bills while waiting for the repairs. This valuable insurance protection can mean the difference between staying in business or having to close down permanently.
Additional Information on Kansas Insurance
The Kansas Insurance Commissioner has additional information about Kansas insurance. Learn more by visiting the website at http://www.ksinsurance.org or calling (758) 296-3071.