How Much Liability Insurance Do I Need for my Business?

“How much liability insurance do I need for my business?” is a question many entrepreneurs have. The short answer is as much as your budget will allow.

Additional factors that affect the cost of your liability insurance are:

  • the type of business you operate
  • the annual amount of your gross sales/receipts and employee payroll

The Basics of Liability Insurance

When it comes to liability insurance fundamentals, the phrase “business liability insurance” is a wide notion. 

There are Many Types of Business Liability Insurance

It’s important to have a conversation with your local, independent insurance agent to determine which types of liability insurance you should invest in for your business. Below are the most common types of business liability.

  • General Liability
  • Professional Liability
  • Automobile Liability (even if you don’t own one)
  • Employee Practices Liability Insurance
  • Cyber Liability
  • And others

How Much Liability Insurance is Needed?

Liability insurance protects and defends your business for everything it’s legally obligated to pay for because of it’s operations, subject to policy coverage and exclusions. When thinking about how much liability insurance you need, there are two important pieces of data you should consider:

  • how much is your business worth?
  • what are your contractual obligations to provide liability insurance?

Your local independent insurance agents at Stromsoe Insurance Agency are here to help you determine what’s best for you and your business.

 

Questions? Want to learn more? Here’s 4 easy ways to reach us:

Phone: 877-994-6787
Email: insure@siaonline.com
Text: 951-482-8144
Web: www.siaonline.com

PS Here’s a few words from one client that trusts Stromsoe Insurance Agency:

“Our longtime agent told us it would be 5-7 days to get basic BOP/General Liability Insurance. I called Stromsoe because it had 5 star reviews and so many people (200 plus) giving them excellent reviews. And they lived up to it. Ann P. immediately addressed my issues, figured out how to satiate our commercial landlord, locked down feasible rates, and made it happen for us in one day. Endlessly responsive and informative. We got our Certificate of Insurance on a complicated issue. Thanks Ann. You deserve to be recognized. I’m switching both of our businesses to YOU! Highly recommend, see Ann P.”Nicole Fuller – Dr. Maryanne Hannaney & Nicole Fuller – Temecula, CA – Client Since 2021

PPS Every policy is backed by our iron clad, 100% complete satisfaction guarantee. Ask for your copy today!

Are You Paying the Correct Work Comp Premium?

There are many factors that contribute to your company paying the correct work comp premium. Below are considerations you must be thinking about when purchasing work comp insurance. 

PAYROLL

INCLUDES wages, salaries, commissions, cash payments to subcontractors, bonuses, vacation, holiday and sick pay, straight pay for overtime hours, market value of lodging provided, market value of gifts, and all other substitutes for money.

DO NOT INCLUDE WITH PAYROLL:

  • Overtime pays in excess of straight pay for the employee. Put the overtime excess payroll in the box marked “Overtime Excess.”
  • Payroll of owner of sole Proprietorship; or husband and wife Employer if joint ownership is NOT a corporation or partnership.
  • Payroll for corporate officers, partners, or member managers of LLC if specifically EXCLUDED BY CURRENT ENDORSEMENT to the policy.
  • Wages of subcontractors that provide you with a valid Certificate of Workers’ Compensation coverage.

 

INTERIM RATE (Actual Rate You Pay per $100 of Gross Payroll)

The RATE listed on your payroll report or policy is an adjustment to company base rates and already includes the competitive rating credits/debits, which apply to your policy. This rate may include an Estimated Premium Discount, which is based on an estimate of your payroll/premium for the policy. Your final bill will use company base rates, apply competitive rating credit/debits, and calculate a Final Premium Discount for your policy. If ESTIMATED payroll DIFFERS FROM ACTUAL PAYROLL, final Premium Discount can change at FINAL billing after audit, and may result in premium due or a refund.

 

CALCULATING PREMIUM

To calculate premium due for each classification, multiply the gross annual payroll by your interim rate as a percentage. Always deduct excluded remuneration before calculating.

 

EXPERIENCE MODIFICATION

If the Workers’ Compensation Insurance Rating Bureau, NCCI or your state jurisdiction issued an experience modification (XMOD) for your policy (must meet and maintain 3-year premium threshold), you should have been notified by an endorsement. The XMOD will appear in the Experience Modification section of the payroll report or on your policy declaration. Please multiply the XMOD by the gross premium amount to calculate total premium due for the reporting period.

 

EXECUTIVE OFFICERS AND PARTNERS

UNLESS SPECIFICALLY EXCLUDED by endorsement, officers or partners are covered for benefits. Payroll should be reported, subject to minimum and maximum remuneration per annum for each officer or partner. The minimum and maximum payroll amounts for most recent years are as follows:

Policy Year                                      Minimum Payroll                          Maximum Payroll

2020                                                       $54,600                                                 $139,100

2021                                                        $54,600                                                 $139,100

 

CONSTRUCTION CLASSIFICATION BY WAGE LEVEL

Certain construction classes are divided into multiple codes depending on the regular hourly wages paid to an employee. Report payroll according to the wage level indicated on the front of your payroll report or declaration page. The wage thresholds may change from year to year and are subject to verification at time of audit.

 

CONTRACT WORKERS (SUB-CONTRACTORS) (1099s)

To exclude contract workers from reported payroll, a valid license (when required) and a valid Certificate of Workers’ Compensation coverage MUST be available and shown to auditors (at time of audit) to avoid additional premium charges. Contact our office if you have any questions about contractor (1099) / employee (W-2) status.

 

CHANGES IN OPERATION

ANY CHANGES in operation MUST be reported in writing to the Insurance Company immediately. Any additions, changes or updates of a classification, including 8810-Clerical and 8742-Outside Sales, must be approved, and endorsed on your policy by the Insurance Company before the payroll report can be processed and the classification allowed. To request any of the below, contact our agency at 877-994-6787.

  • A new classification,
  • a change in operations,
  • change in ownership,
  • or other changes such as officers, location, etc.

 

If you would like to discuss any aspect that affects your Workers Comp coverage and premium, here are 4 easy ways to reach us:
Phone: 877-994-6787
Text: 951-482-8144
Email: info@correctcomp.com
Web: www.correctcomp.com

Here are some kind words from a business that trusts Stromsoe Insurance Agency:
“I can always count on the staff at SIA to work with me and do some of the most engaging hard work to get my insurance issues handled as well as the simple easy items I should probably do myself. Small or large they are willing to take the task on. The great people at SIA are always willing to go the extra mile.”
Terri Barry – Safe and Secure Locksmith Service – Murrieta, CA – Client Since 2002

The CorrectComp system is a division of Stromsoe Insurance Agency