Many small business owners only have a certain budget for insurance, so a strong relationship with an insurance agent who takes a proactive approach to mitigating risk and protecting their business is key. The cost of business insurance is not prohibitive, but replacing offices and not being able to work because of a loss can be.
“Remind yourself that having good coverage is one of the costs of doing business and part of your responsibility to yourself, your business and others who depend on you,” says Marc McTeague, president of Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company.
Smart Business spoke with McTeague about what small business owners need to understand about their insurance coverage and risks.
What are the most important insurance coverages for small businesses?
Every business, even if it’s home-based, needs to have liability insurance. This provides both defense and damages if you, your employees, your products or services cause or are alleged to have caused bodily injury or property damage to a third party.
If you own your building or have content, known as business personal property, including office equipment, computers, inventory or tools, you will need property insurance that will protect you if you have a fire, vandalism, theft, smoke damage, etc.
It is also important to include business interruption/loss of earnings insurance as part of the policy in order to protect your earnings in the event the business is unable to operate.
Lastly, with commercial auto insurance, you can insure your work vehicles from damage and collisions. If you do not have company vehicles, but employees drive their own cars on company business, you should have hired and non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage.
The top 10 insurance coverages are:
- General liability insurance.
- Property insurance.
- Commercial auto insurance.
- Workers’ compensation.
- Professional liability.
- Employment practices liability.
- Directors and officers insurance.
- Privacy and security coverage, also known as cyber liability.
- Personal home and auto policy.
- Umbrella coverage.
Where do some business owners fall short on essential protection?
A business may fall short in identifying risks when its risk management measures are reactive and not proactive. It’s important that a business aligns itself with an insurance agent who takes a proactive approach to mitigating your risk. Meeting with your agent on a quarterly or semi-annual basis will help to identify exposures that could potentially cost a business everything.
In addition, a proactive approach to minimizing risks in the workplace may help to lower your insurance premiums by preventing future claims.
How much does the size and type of business impact what insurance is necessary?
Risks increase substantially as a business grows, as more employees are hired and as more services are rendered or products sold. While a crossbow manufacturer will certainly have different needs and risks than a website designer, having the right protection is equally important.
Creating a new revenue channel, opening a new location or making any significant change to how your business normally runs should be reviewed with your insurance agent. Major changes like these can lead to gaps in your insurance coverage, leaving a business exposed.
Business owners put a lot of time and energy into growing their business and providing for employees and their families, it is important they make sure it is properly protected.
Marc McTeague is President of Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-RISK (7475) or firstname.lastname@example.org.
Insights Business Insurance is brought to you by SeibertKeck
Statistics from the National Council on Compensation Insurance show that 38 to 50 percent of all workers’ compensation claims are related to the use of alcohol or drugs in the workplace. According to the U.S. Small Business Association, on average, employees with inappropriate substance use cost their employers $7,000 annually. Many Ohio businesses are turning to the Bureau of Workers’ Compensation’s (BWC) Drug Free Safety Program (DFSP) for assistance to address this issue and reduce their annual premium.
“A well-designed DFSP will help an employer deter substance use on the job, create a safer workplace and impact the bottom line by providing a discount to the employer’s premium,” says Cassy Taylor, senior risk services analyst at CompManagement, Inc.
Smart Business spoke with Taylor about the main components of Ohio’s DFSP.
What discount levels are available and when are enrollment deadlines?
DFSP offers basic and advanced discount levels that provide a 4 and 7 percent discount, respectively. Public employers wishing to participate may start their program Jan. 1 of each year. However, private employers have the opportunity to begin on either Jan. 1 or July 1. Applications for programs beginning Jan. 1 are due to the BWC by the last business day of October while those starting July 1 must submit their applications by the last business day of April.
What components does a DFSP require?
Basic and advanced levels of DFSP require:
- Annual reporting.
- Annual online safety assessment.
- Accident analysis training for supervisors.
- Use of online accident analysis on the BWC website for each accident/claim.
- A written policy in place.
- A minimum of one hour annual employee training.
- A minimum of two hours first year and one hour refresher supervisor training.
- Pre-employment, post-accident, reasonable suspicion and return to duty follow-up drug/alcohol testing.
- A cut off level of .04 blood alcohol content.
- Zero tolerance (basic level only).
- List of referrals for employee assistance.
In addition, the advanced level program also requires 15 percent random drug and alcohol testing, a second chance agreement for employees, a substance assessment for employee assistance and an annual safety action plan.
How does Ohio’s rebuttable presumption law factor in?
The rebuttable presumption law puts the burden on employees to prove that alcohol or drugs found in their system were not the proximate cause of a workplace injury. It also allows employers to ask for a disallowance of a workers’ compensation claim for an employee who tests positive on a qualifying chemical test. The law also is applied if an injured employee refuses a test. For a workers’ compensation claim to be allowed the injured employee must prove that being intoxicated by alcohol or under the influence of any controlled substance not prescribed by the employee’s physician was not a factor in the accident that caused the injury. Employers must post a written notice provided by the BWC to alert employees that they may not be eligible for workers’ compensation benefits if they are injured while intoxicated or under the influence of a controlled substance.
What impact would the DFSP have on a midsize company’s premium?
Assuming the eligibility and program participation requirements are met, a midsize service company could expect the following in annual premium savings by implementing the advanced level program, assuming the employer is participating in no other alternative rating programs:
- Payroll — $3,990,000.
- Individual discount — 16 percent.
- Individual premium — $14,683.
- 7 percent advanced level DFSP discount — $700*.
*Based on pure premium, which does not include assessments for DWRF and administrative costs for operation of BWC/IC.
Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with DFSP such as Group Rating, Destination Excellence, Small Deductible, and Safety Council to name a few. Always have your third-party administrator conduct a feasibility study to evaluate the best savings options available for your organization.
Cassy Taylor is senior risk services analyst at CompManagement, Inc. Reach her at (800) 825-6755, ext. 65434 or email@example.com.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
Early in his career, Paul Demirdjian had been involved in developing software applications to facilitate process efficiencies, enhance customer service and product delivery. At the time, he knew he was only scratching the surface of the potential that Web-based technologies held.
He envisioned that websites of the ’90s would quickly evolve from simple information presentation layers into transaction layers, enabling companies to interact with and sell to their customers.
This vision was accelerated by an experience he had dealing with an online electronics retailer whose call center couldn’t locate his order, nor did they know if the product was in stock.
Astounded to learn that the retailer’s website couldn’t access inventory information, Demirdjian realized there was a growing need for a software platform that could allow companies to integrate disparate systems so that real-time information could be aggregated in one database with one administrative environment and one branded customer experience.
In 1999, Demirdjian started Internet Business Integrated Solutions to pursue his vision and began building architecture for what would become Jagged Peak’s flagship software — EDGE. After founding IBIS, he realized he needed additional expertise. In 2000, Demirdjian merged IBIS with Compass Marketing Solutions to form Jagged Peak.
In 2009, Jagged Peak was approached by a global consumer products company with a difficult challenge that revealed a major competitive advantage. The client needed a single solution provider that could create B2B and B2C web stores, provide order management, set up and manage distribution, as well as the warehouse and transportation management systems, and they needed it fast.
Jagged Peak was able to deliver within 60 days because EDGE is web-based, so rather than installation, it merely requires configuration and activation. It also spans the entire eCommerce ecosystem, handling everything from order capture to order management to order fulfillment.
Since then, Jagged Peak’s EDGE platform has been recognized as a best-in-class ECP and OMS.
How to reach: Jagged Peak, www.jaggedpeak.com
Crystal Clear Technologies
Crystal Culbertson had launched a successful business, but there was something missing that would make Crystal Clear Technologies even better. Culbertson decided she needed to begin performing the services that she was selling in order to bring the consulting firm to its full potential.
So she and her husband, who was also the company’s president, brought services in house. It wasn’t easy and the Culbertsons had to raise some of the money for the firm by borrowing against their own property. But the risk paid off, despite a lot of sleepless nights.
CCT provides IT services to the military and government and advises companies seeking help through federal procurement policies. As you might expect when doing business in the government sector, there can be a lot of obstacles to work through. But Culbertson, the company’s CEO, has proven to be effective at making sense of it all and helping her business stay ahead of the curve.
She’s even shown a willingness to take a loss to help her customers when they really need it. It was March 2010 when CCT sent eight employees to Japan to install a secure broadband network at Kadena Air Base. The company had $1 million of supplies en route just as a devastating earthquake and tsunami struck the island country.
Shipping delays ensued and additional time was needed to locate supplies. But word of the cooperation and willingness of her people to find a way to make it all work spread quickly to others and opened the doors to new projects opportunities for CCT.
The drive and determination Culbertson showed to be there for her clients when they needed her most have been key factors in the company’s success. The company continues to grow and has reached a point where potential buyers have approached Culbertson. But the strong commitment she has for her people has kept her from seriously considering any of these offers.
How to reach: Crystal Clear Technologies, www.crystalcleartec.com
Michael I. Kaufman
president and CEO
Kaufman Lynn Construction
Mike Kaufman did not start Kaufman Lynn Construction under the best of circumstances. He was a father of four who suddenly found himself out of work and needing a job to support his family.
His first step was to dust off his tools from college and begin taking odd jobs for homeowners as he simultaneously looked for an opportunity to break into the commercial side of the construction industry.
He got an offer to perform as a subcontractor which he took eagerly, but it required him to take out a personal loan from his mother-in-law in order to pay his crew and purchase supplies. But through hard work and skillful management of cash flow, he was able to leverage that first commercial project into other opportunities and steadily build the scope and scale of his projects.
As president and CEO at Kaufman Lynn Construction, Kaufman sees the ability to track and understand costs as a core competency of the business and a contributing factor in the company’s ability to weather economic downturns. During the recession, it allowed him to take his profits and reinvest them into developing new market sectors that would help the company.
As other contractors were laying off employees, Kaufman took advantage of the newly available talent pool.
One of the most important goals for Kaufman was to build a business that is sustainable with sound practices and processes and a willingness to adapt on a job-by-job basis.
As a result, Kaufman has built a company that is viewed from the outside as available, adaptable and accountable for everything it does. It enables Kaufman Lynn to compete against the biggest and the best contractors in the country.
But there’s always room for more improvement, so Kaufman encourages his employees to further their skills and pursue training that can help them get even better at what they do. The hope is to develop leaders that will ensure the company’s success for years to come.
How to reach: Kaufman Lynn Construction, www.kaufmanlynn.com
Dan Doyle Jr.
president and CEO
Dan Doyle Jr. had two objectives in mind when he co-founded DEX Imaging in 2002 with his father, Dan Sr.
He wanted to create a privately-held dealership that focuses on quality service. He also wanted to give back one third of the company’s profits to charities and educational programs within the markets where DEX does business.
That commitment to both community and customer service has not wavered a bit over the past decade as Doyle has grown his business through the headwind of one of the toughest economic downturns the industry and the country has ever seen.
DEX has the lowest employee turnover rate in the industry as many of its sales, administrative and service personnel have been with the company since its inception. This means there is a legacy of performance excellence that customers of DEX Imaging experience first-hand.
One of the reasons employees stay is that the company has created a business environment that promotes transparency and encourages everyone to succeed in what they do. The company’s profit-sharing program awards bonuses to employees who consistently achieve high levels of performance each year.
When employees join DEX, they go through a rigorous and comprehensive in-house training program that not only provides certification on the makes and models that DEX sells, but also the makes and models of all other manufacturers.
This creates the opportunity for customers to have one option that can service all their document-imaging assets. The company also has an inventory auto-replenishment system that keeps warehouses fully stocked at all times with equipment, parts and supplies.
But just as important as the company’s operational philosophies are its philanthropic efforts. DEX’s Charitable Outreach Program has donated millions of dollars to organizations ranging from schools to special-needs programs to at-risk child mentoring agencies.
Giving back creates stronger communities and helps the company take an active leadership role in making a difference in the place it calls home.
How to reach: DEX Imaging, www.deximaging.com
CEO and co-founder
president and co-founder
Liberty Power Corp.
David Hernandez and Alberto Daire weren’t scared off from founding Liberty Power shortly after the 2001 Enron Corp. scandal. It was a trying situation, however, and entering the power industry at that time presented significant risks. Banks were hesitant to make loans, and customers had lost trust in utility companies.
So the pair took a different approach — Liberty Power was able to position itself as the “anti-utility company” that focused on customer relationships and excellent service rather than chasing profits.
Hernandez and Daire have led Liberty Power to become the largest independent retail electricity supplier as well as the largest Hispanic-owned energy company in the U.S.
The company’s rise to distinction reflects the strong work ethic and entrepreneurial spirit that the founders live and lead by. Both came from humble backgrounds, invested every cent they had to start the company, and neither took a salary for the first three years of operation.
One of the key factors in the growth and success of Liberty Power was that the company was able to build strong, personal relationships with customers. Daire went door-to-door to hundreds of businesses to seek customers while Hernandez negotiated with power plant owners to find suppliers.
When the switch was thrown in September 2002, 100 commercial customers in the New York City area came online with Liberty Power.
While the electricity was then flowing, the challenges did not end there. Liberty Power struggled to obtain lines of credit and almost ran out of money. Hurricane Katrina and the BP Deepwater Horizon oil spill brought additional problems. Liberty Power had to find a new creditor when a large, multi-national bank collapsed.
Attacking these challenges and solving them has made Liberty Power a stronger company as it moves into the future.
The company mirrors its relationship-building efforts for customers to employees as well. With a “people first” philosophy, employees share the company culture values of accountability, diversity, integrity, respect, teamwork and trust.
How to reach: Liberty Power Corp., www.libertypowercorp.com
Philip Anson Jr.
STS Holdings Inc.
When it comes time to honor employees who have been with 29-year-old STS Holdings Inc. for 10 years, CEO Philip Jay Anson Jr. gives the employee a Rolex watch as recognition. The Rolex watches are a small expense when thanking employees for their loyalty — the main reason why STS has been able to grow into the type of company it is today.
In fact, Anson says, STS does not have to work overtime to attract talent these days. Nearly every day someone knocks on the company’s door looking for an opportunity; some are willing to start at entry level as they just want to be part of STS.
When his father Philip Anson Sr. took over STS operations in 1997, everything was going well. The company had been experiencing growth and became the market leader in its niche industry of providing aircraft mechanics to large repair centers around the U.S. But like the bulk of the airline industry, things were not so rosy after 9/11. Overnight, STS lost more than half of its revenue.
Anson was asked to take over STS’s operations by the board of directors with the goal of diversifying the company and developing additional sources of revenue. Instead of cutting expenses and waiting for business to recover, Anson convinced the board of directors to invest as much as possible in talent and infrastructure. He then was able to design extremely scalable systems that could handle 10 times the amount of business.
Not only has STS since been growing its revenues and employee headcount, it has also assisted many of its customers to grow, for example JetBlue and Northwest. An example of their ability to innovate and revolutionize the market pertains to how STS was able to install the Wi-Fi systems in the Air Tran Airways fleet. To the surprise of Air Tran, STS installed the systems in one shift as opposed to the estimated three to four shifts.
How to reach: STS Holdings Inc., www.stsholdings.com
Retail & Consumer Products
Shoes for Crews, LLC
Matthew Smith knew he was on the path to leadership at Shoes for Crews LLC since he first began working for the company in high school, a company his parents founded in 1984. In fact, instead of the typical college student pondering what to do in life, Smith spent his college days answering the question, “How can I use the people around me to be most successful at what I know I will do with my life?”
From this early onset until today, Smith’s leadership strategies over his team of 484 employees and customers at 140,000 locations all still depend on teamwork, a reminder that some of the best ideas are suggested by others.
Shoes for Crews is the leading manufacturer and designer of proprietary slip-resistant footwear in the workplace and has been for more than 25 years. The company produces and sells 110 styles of footwear, with outsoles created with a rubber grid pattern to grip the roughness of the floor surface and to help channel liquids away from the bottom of the sole.
It was a business prospect who initiated the idea for the slip-resistant footwear business, a customer who suggested the employee payroll deduction business model, and a new face at a trade show who assisted in the development of a quality rubber formula that no competitor to date has been able to replicate. Smith’s leadership has joined these unique ideas to develop Shoes for Crews into the success it is today.
When Smith became the vice president of Shoes for Crews in 2001, the company only sold its footwear domestically. Since then, the company has begun production in both Canada and Europe and, just in 2011, opened a sales office and warehouse in Shanghai.
As CEO, Smith has devised a plan based on values learned from his parents, established goals and expectations to guide his business, and leads a company that continues to expand and thrive globally.
How to reach: Shoes for Crews LLC, www.shoesforcrews.com