Insurance Q & A's

The insurance coverage and employee benefits you need for your new business will depend on many factors. Does your business operate as a franchise or independent business? Do you run your business from your home or a building that you own or lease? Do you have employees? Do you sell a product or provide a service for your customers?

Here are the answers to the most commonly asked questions of new business owners.

Q  What employee health benefits should I provide for my employees?

A The health benefits that you provide for your employees is up to you, just as you decide their rate of pay. When deciding on benefits, remember that your business competes to attract the best employees, so it is important that the health benefits that you offer your employees must be competitive for your industry. 

Q  What business insurance is needed for a franchise business?

A  Most franchises require the franchise owner have Comprehensive General Liability insurance, Workers Compensation (if you have employees), and Business Auto Insurance (if you have company vehicles). Often the franchise will require additional Umbrella coverage. The franchise will want to have a certificate of insurance before you open for business.

Q What is a certificate of insurance?

A  A certificate of insurance is normally required by a franchise company to verify that the required insurance policy is in effect for stated amounts and coverage.

Q What is business interruption insurance?

A  Business interruption insurance is normally included with the comprehensive insurance you purchase for your business that pays a benefit in the event of an occurrence that keeps you from conducting business.

Q  What is an Annuity?

A Annuities allow you to accumulate tax-deferred funds for retirement and then, if you desire, receive a guaranteed income payable for life or for a specified period of time.

Q What is COBRA and do I need this for my new business?

A  COBRA is the federal regulation that requires that employers provide terminated employees an opportunity to continue their medical coverage at their own cost. This applies to companies with 20 or more employees that have group health insurance.

Q  What are Flexible Spending Accounts?

A Setting up Flexible Spending Accounts (FSA’s) as part of your employee benefits is a way employees can reduce their personal taxes by setting aside a set amount each month for their out of pocket healthcare and other anticipated expenses. The disadvantage of FSA’s is that you must use the total amount set aside in the spending account by the end of the year or you will lose it.

Q  What is an Enrollment Period?

A  Enrollment period is the specific time period that employees have to change or add coverage to their insurance plans.