Posted on May 16, 2014
With a diverse economy and broad range of industries operating in Minnesota, business owners must strive to do everything possible to protect their business investment. Keeping property, workers and customers safe in addition to everything else needed to run a business today requires appropriate commercial insurance protection so companies can go about doing what they do best - running a business.
Navigating the challenging world of commercial insurance requires knowledge and expert assistance to make the right choices to meet business needs and budgeting. The following information will help business owners on their way to understanding Minnesota insurance requirements as well as options available to provide the best protection.
Minnesota Liability Coverage
When someone gets hurt at a place of business or becomes ill from a product served from a food establishment, the company providing the space or meal can be held liable for that injury. That is where general liability insurance comes in and covers the cost of that claim.
In fact, general liability covers more than just physical injury. It also takes care of damage to other people's property, false advertising injuries, slander and libel. It will pay for awards given to injured people, pain & suffering as well as any penalties or judgments against the insured company. The only issues general liability will not cover are those related to employee practices, motor vehicles and worker's claims.
Additional coverage can be obtained to cover employee issues. This form of liability insurance is called employment practices, and it provides coverage from employee claims of harassment, discrimination and wrongful termination. With today's society becoming more litigious, this liability insurance can protect companies from this risk while also paying legal defense costs.
Other liability insurance for business owners to consider is crime insurance, which protects from theft and embezzlement; internet insurance, which covers internet businesses for damage from viruses and hackers and umbrella policies that offer additional protection over and above the standard limits of liability, which is especially helpful for companies with large assets or in high risk industries.
Workers Compensation Coverage
Minnesota requires that all employers purchase workers compensation insurance plans or become self-insured. All employees are to be covered including minors, non-citizens and part time employees. Workers compensation covers on the job illness or injury of employees. Should a worker need care, the insurance pays medical expenses, rehabilitation costs and wage benefits.
Failure to provide the appropriate coverage for workers can result in penalties of up to $1,000 per employee each week during the period when not insured. Additional penalties may be imposed if employers do not comply with orders to obtain coverage.
Commercial property insurance in Minnesota provides protection of business buildings and personal property within the building. It will cover damage caused by accident or loss by theft. This coverage usually pays to replace or repair the item if damaged and will compensate for the loss based on the value of item if lost or stolen.
Small to mid-sized businesses often benefit from purchasing business owner policies that combine commercial property and general liability together into one contract package at a reduced rate. Business owners who lease their business space utilize property insurance to cover their inventory, furniture, computer equipment and supplies in the event of damage or loss.
The way in which a policy will pay the value of claims is based on either the replacement cost or actual cash value. Replacement cost policies usually cost more because they replace an item with a brand new one; whereas, actual cash value policies take into account depreciation to determine how much an item is actually worth compared to depreciated market value. For leased equipment, most vendors will require businesses to carry replacement value property insurance, and when items are stolen or damaged beyond repair, this determination basis will allow businesses to get back up and running quickly.
Commercial Flood Insurance
Protecting your business building and its contents from flooding is vitally important to staying in business. Commercial flood insurance protects companies from any physical damage caused by floods. Those companies that are located in low risk areas will typically receive preferred rates on flood insurance to cover both buildings and contents. For those who rent their business space, contents only policies are also available. Buildings located in high risk flood areas apply for coverage under the National Flood Insurance Program administered by FEMA.
The cost of flood insurance is determined by factors such as the building's age, number of floors, contents, flood risk and deductible. Commercial flood insurance offers $500,000 coverage for buildings and $500,000 for contents. Flood insurance policies have a minimum 30 day waiting period before they go into effect so applying early will ensure that coverage is available when needed.
Required Section 125 Plans
For employers with 11 or more full time employees, the State of Minnesota mandates that they must offer a Section 125 plan for their workers to purchase health insurance with pretax dollars if the company does not provide employer sponsored health insurance. Companies do have the option to opt out of the requirement if they file with the Commissioner of Commerce that all employees received information about plan advantages and chose not to establish the plan.
Additional Information on Minnesota Insurance
Visit the Minnesota Department of Commerce Insurance Division at http://mn.gov/commerce/insurance/index.jsp or call (651) 296-4026 to learn more about commercial insurance in Minnesota.