Professional Liability, Explained!

| NYC Business Group

Professional Liability, Explained!

As a business owner, you strive to improve your business daily. It could take months and sometimes years to achieve a sustainable level of success. It will be a waste of all your hard work if a hateful comment from your employee to your customers lands you in court battling a lawsuit. 

That is why most business owners protect their business with professional liability insurance. You should highly consider getting insurance if you sell your services. 

What is Professional Liability Insurance?

Also known as Errors and Omission Insurance, or E&O, professional liability insurance protects businesses from customer claims. If one of your customers sues you, then professional liability insurance covers the cost of the lawsuit. The policy protects individuals from business owners' liability from claims arising from practices such as negligence, misrepresentation, and malpractice. Professional liability coverage offers protection to experts like accountants, physicians, or lawyers where their general liability policy is insufficient. 

How Professional Liability Insurance Works:

Depending on your career, professional liability may have a different name. For instance, to medical practitioners, the policy is called malpractice insurance. To real estate agents, it is E&O insurance. 

These policies are usually arranged on a claims-made basis. This means that you only enjoy the protection of the insurance policy if the claims are made during the period when the insurance policy is active. Therefore, any incidents before the policy became active may not be covered. 

What Risks Does Professional Liability Insurance Cover?

A client may claim that your organization's or employee's negligence cost them a hefty loss. Following this claim, they may sue for compensation, which could mean a long, expensive, and tiring battle in court. A perfect example is when a wedding planner sues a florist for failing to deliver flowers to the wedding venue, resulting in conflict with the client and possibly terminating their contract. With professional liability insurance, you can hire a lawyer with ease.

Some of the claims that the professional liability covers include:
  • Breach of contract
  • Accusations of negligence
  • Incomplete works
  • Inaccurate advice
  • Personal injury resulting from libel or slander
  • Misrepresentation
  • Budget overruns
  • Missed deadlines, etc.

Businesses That Should Consider a Professional Liability Insurance

If you are a business owner, you may be wondering if you need professional liability insurance if you already have your general liability insurance. 

The short answer will be: The need for the policy depends on your business.

CONSIDER A SCENARIO;

A doctor who is knee-deep in the service industry bears a lot more business owner's liability than a hardware store owner.
Depending on your business, you can survive with a general liability cover without professional liability insurance.  So, if you are in the professional service industry, you should look into getting a professional liability cover. 

That means that you should make plans to find an affordable professional liability insurance coverage if you:

  • Offer professional services directly to your customers
  • Regularly advise your clients
  • Sign a contract that requires you to carry coverage. 
  • This applies to consultants, doctors, lawyers, and other medical professionals. 

Other businesses that should consider professional liability insurance include:

  • Architects
  • Insurance professionals
  • Real estate agents
  • Accountants/ auditors
  • Consultants
  • Market research firms
  • Interior designers
  • Advertising agencies
  • Graphic designers
  • Technology professionals
  • Engineers

Some states even specify the professions that must have professional liability insurance during their operation. By contacting our office, we can guide you in what your business needs, in regards to coverage.

How Does Professional Liability Insurance Protect Your Business?

Getting professional liability insurance can benefit your business in many ways. Some of them include:

Protects your business from common risks-With this coverage, you can protect your business from common risks such as mistakes, omissions, errors, and breach of contract. So, when your employee mistakenly discloses some information about your client and you end up in court, you do not have to worry about the legal fees. Gives your customers confidence- Professional liability insurance adds to the professionalism of your business. It gives the impression that you are serious about your work and ready to defend your reputation and pride. 

It offers protection, even when you are not at fault. 

Sometimes, you face legal action when you are innocent. Even then, you must endure the long process and spend a lot of money on a lawyer to prove your innocence. Even in such situations, professional liability insurance has got you covered. 

The premiums you pay for your professional liability insurance will, however, depend on your daily operations, the number of employees, coverage limits, the level of risk of your business, and your claim history.

Conclusion

Many small business owners make the mistake of ignoring the importance of professional liability insurance. And since you have learned the importance of it, you should go the extra mile to protect your business. Get yourself a good plan, and you will not regret it. Give us a call today for a Free Quote!

What is the Difference between an Individual Contractor and Sole Proprietor?

| NYC Business Group

What is the Difference between an Individual Contractor and Sole Proprietor?

If you are thinking of starting a business or entering into contractual agreements, it is important to understand certain terms. A sole proprietor and an individual contractor are two common and confusing terms. Although they may seem similar, they are different. In this article, we will help you understand the two terms to help you make informed entrepreneurial decisions.

A sole proprietorship is the simplest form of business ownership. Therefore, if you are a sole proprietor, you own and operate a business, assuming full responsibility for its success and liabilities. However, an individual contractor is an entity or individual hired by another business/individual to provide specific services or complete a task/project.

Types of Insurance Sole Proprietors and Independent Contractors Should Consider

The insurance implications of independent contractors and sole proprietors can vary because the two business structures are different. Here are some of the policies each entity should consider:

Sole Proprietor:
Liability Insurance

Sole proprietors are personally responsible for the business's liabilities. As such, they must consider liability insurance to protect personal assets in case the business incurs debts or faces legal claims.

Business Property Insurance

If the sole proprietor owns business property, such as equipment or inventory, they may need business property insurance to cover losses due to theft, damage, or other covered events.

Professional Liability Insurance

Depending on the nature of the business, a sole proprietor might also consider professional liability insurance (errors and omissions insurance) to protect against claims of negligence or mistakes when offering professional services.

Health Insurance

Sole proprietors typically need to secure their own health insurance coverage to avoid paying out of pocket when they get sick or involved in an accident. This is a significant consideration, as they do not have access to employer-sponsored health plans.

Independent Contractor:
General Liability Insurance

Independent contractors often need general liability insurance to protect against third-party claims of bodily injury or property damage that may occur when offering services or selling products.

Professional Liability Insurance

Similar to sole proprietors, independent contractors may require professional liability insurance if their work involves providing professional services to clients. Professional liability insurance (E&O) helps protect business owners against losses emerging from professional errors and omissions when offering professional services. You need E&O just in case you or one of your contractors makes a professional mistake.

Worker's Compensation (if applicable)

Independent contractors are not usually eligible for worker's compensation from the entities they work for. However, they might need to provide their own coverage, especially if they have employees working under them. 

Health Insurance

Like sole proprietors, independent contractors are responsible for obtaining their own health insurance coverage and you should always consider health insurance coverage.

Some Shared Insurance Considerations include:

Business Interruption Insurance

Both sole proprietors and independent contractors might want to consider business interruption insurance to help cover lost income if their business operations are disrupted due to unforeseen circumstances (e.g., natural disasters, and fires).

Auto Insurance (if applicable)

If either a sole proprietor or an independent contractor uses a vehicle for business purposes, they should ensure that their auto insurance provides adequate coverage for both personal and business use.

Home-Based Business Insurance (if applicable)

For those operating businesses from home, additional insurance considerations may arise, such as the need for home-based business insurance to cover business-related assets. It might seem unnecessary but you can incur a hefty financial loss if you encounter a fire, damage by extreme weather, theft, etc.

Conclusion

It's important for both sole proprietors and independent contractors to carefully assess their specific business activities, risks, and legal requirements when determining the appropriate insurance coverage. Consulting with an insurance professional can provide personalized guidance based on the unique circumstances of your business. Allow us to be that professional help to guide you in the insurance process, 718-554-3425.

5 Costly Group Health Insurance Mistakes to Avoid

| NYC Business Group

5 Costly Group Health Insurance Mistakes to Avoid

Securing group health insurance is a critical step for any organization looking to provide comprehensive healthcare coverage for its employees. While this benefit is essential, many businesses fall prey to common mistakes that can hinder the effectiveness of their group health insurance plans. In this article, we will explore five prevalent mistakes and discuss how to avoid them to ensure a successful and cost-effective health insurance program for your team.

Firstly, employers need to familiarize themselves with the law to avoid expensive mistakes. Secondly, if the Department of Labor or IRS inquires, you should address the issues promptly to avoid incurring hefty fines. Employers should understand the compliance requirements of The Affordable Care Act (ACA) to help make the right choices. Although it is advisable to hire outside consultants, understanding the ins and outs of your business helps make sound decisions.

Here are 5 mistakes you should avoid:

No Plan Documents

What is a plan document? A plan document describes the operation and administration of an employer’s plan. A plan document is required for each welfare benefit plan an employer maintains according to the Employee Retirement Income Security Act (ERISA). Without a plan document, employers fail to meet set requirements and could face a penalty. Here are some of the details included in a plan document:

  • Description of the benefits included
  • Amount of money the participant must pay for coverage
  • Dates of participation
  • Those eligible to participate
  • Name of the plan administrator
  • How the plan is funded
  • How insurer refunds are allocated

If you do not understand what a plan document is or how you can curate one, consult a professional instead of taking unnecessary risks. By law, plan documents should be accessible to employees.

Highly Compensated Discrimination

Highly compensated discrimination refers to situations where a group insurance plan disproportionately favors high-income employees, potentially to the detriment of lower-income workers. In group health insurance, this discrimination can manifest in various ways, such as offering more robust benefits, lower premiums, or better coverage options to highly compensated employees compared to their lower-income counterparts. According to the Internal Revenue Service (IRS), employers should provide similar benefits to highly compensated and non-highly compensated employees.

Highly compensated discrimination in insurance can have significant consequences for both employees and employers in the long run. However, if employers address this problem, businesses can foster a workplace culture that prioritizes equality and fairness in the provision of group insurance benefits. Striving for inclusive policies not only ensures compliance with regulations but also contributes to a positive and supportive work environment for all members of the workforce.

No Summary of Benefits Description (SBD)

A Summary Plan Description (SBD) in group health insurance is a comprehensive document designed to provide employees with a clear and concise overview of their health benefits. The SBD serves as a crucial communication tool, outlining key aspects of the group health insurance plan in a manner that is easy to understand. By law, employers should provide employees with SBD to help them understand their rights and benefits under the group health insurance plan. Providing SBD to employees and beneficiaries ensures transparency and compliance with set regulations. 

HIPAA Privacy Negligence

The Health Insurance Portability and Accountability Act (HIPAA) plays a crucial role in safeguarding medical privacy and security of individuals' health information. Per HIPAA, organizations and healthcare providers must develop and follow procedures that guarantee the privacy and security of protected health information (PHI). Employees are required to sign a HIPAA form and be notified when their medical information is shared.

Negligence in maintaining HIPAA privacy within group health insurance plans can have serious legal and reputational consequences. Employers and insurers must prioritize ongoing compliance efforts, invest in comprehensive training programs, and establish strict safeguards to protect the privacy of individuals' health information.

Poor Communication

One of the most common mistakes employers make is failing to communicate effectively. Lack of clear communication can lead to confusion among employees, resulting in dissatisfaction and underutilization of the benefits offered. To avoid this, employers should provide detailed information about the coverage, including in-network providers, co-pays, deductibles, and any additional perks or wellness programs.

Employers must notify employees of any plan modifications. You should provide a Summary of Benefits & Coverage (SBC) within 90 days to participants and beneficiaries before rolling out a new plan.

Regularly organizations should conduct educational sessions to help employees understand their benefits and address any questions or concerns they may have. Utilize various communication channels such as email, company newsletters, and intranet platforms to ensure that the information reaches all employees/ plan participants.

Conclusion

Avoiding these common group health insurance mistakes requires a proactive and informed approach. Prioritizing communication, involving employees in decision-making, customizing plans, ensuring compliance, and embracing wellness programs can contribute to the success of a group health insurance program. It is prudent to always consult a reputable Compliance Specialist to avoid incurring penalties. Finally, do not hesitate to reach out to your Broker if you have any questions or concerns. To Get a Free Group Health Quote Call us Today, 718-554-3425

Ghost Kitchen & Virtual Kitchen Industry Insights

| NYC Business Group

Ghost Kitchen & Virtual Kitchen Industry Insights

A ghost kitchen, also known as a dark kitchen, cyber kitchen, cloud kitchen, or virtual kitchen, is a professional food preparation and cooking facility set up for the sole purpose of fulfilling online orders for food delivery. Unlike traditional restaurants, ghost kitchens do not have a physical storefront for walk-in customers or a dine-in area. Instead, they operate primarily through online platforms and cater to the growing demand for food delivery services. Uber Eats and DoorDash are primary examples of ghost kitchens that became famous after the pandemic.

It is important to understand that ghost kitchens differ from takeaway model kitchens. Takeaway restaurants allow customers on their property to place an order. However, ghost kitchens do not allow customers into their property. Therefore, customers place an order virtually and get it delivered to their preferred destination/address. 

What Are the Key Features of a Ghost Kitchen?

Ghost kitchens vary greatly from a traditional kitchen in the following ways:

They do not have a physical dining space - Ghost kitchens focus exclusively on the preparation and cooking of food for delivery. They eliminate the need for a traditional restaurant set-up with seating and other amenities.

Multiple food brands can operate in one location - Ghost kitchens often house multiple restaurant brands or concepts within the same facility. This allows for more efficient use of space, resources, and kitchen equipment. Different virtual brands can operate from the same kitchen, each catering to specific cuisines or customer preferences.

They are optimized for delivery - The kitchen layout and processes in ghost kitchens are designed to prioritize speed and efficiency in fulfilling online orders. This includes optimized workflows for packaging and handling delivery orders.

They emphasize on cost efficiency - By operating in less expensive or unconventional locations and sharing resources among multiple brands, ghost kitchens can be a cost-effective way for businesses to enter the food delivery market without the overhead costs associated with maintaining a physical restaurant space. 

Ghost kitchens became popular during the pandemic after the quarantine was imposed. Most people had to order their food online and virtual kitchens offered much-needed essential services. With time, business owners realized that the business is lucrative. Nowadays, most people rely on ghost kitchens while working from home, at the office, or engaging in other activities.

Just like any other business, insurance companies have stepped in to offer coverage options tailored to cover ghost kitchens’ needs. If you are a small business owner invested in a ghost kitchen business, you must invest in real estate business coverage. This means you should purchase a general liability policy, property insurance, and fire insurance to protect your business against possible financial loss. 

Types of Insurance Policies Ghost Kitchens Should Purchase

Product Liability Insurance

This insurance policy protects the ghost or virtual kitchen against legal claims arising from injury or illness caused by its food products. It covers the legal costs, settlements, or judgments associated with product liability claims. In the food industry, there is always a risk that a consumer may experience harm or illness due to contamination, allergens, or other issues. Product liability insurance helps mitigate the financial impact of such claims and safeguards the business against potential legal action.

Contamination & foodborne illness insurance

This policy is specifically designed to address financial losses resulting from foodborne illnesses or contamination. It may cover costs associated with product recalls, business interruption, and liability claims from affected customers.

It is important to understand that contamination events or foodborne illness outbreaks can be detrimental to a ghost or virtual kitchen's reputation and financial stability. This insurance protects businesses from a financial fallout from incidents that lead to the loss of inventory, business interruption, and legal liabilities.

Commercial automobile insurance

Also referred to as commercial auto insurance, this policy protects businesses that use vehicles for commercial purposes. Ghost kitchens rely on delivering food to their customers using vehicles. Therefore, these businesses hire drivers or purchase automobiles to get the job done. 

The policy covers bodily injury and property damage if the vehicle is involved in an accident. Fortunately, the policy can cover a wide range of vehicles, including cars, vans, trucks, and specialized business vehicles. Remember, commercial automobile insurance covers your business, employees, and sometimes non-employees. 

Given the nature of the ghost restaurant business, where delivery is a central component, having comprehensive and appropriate commercial automobile insurance is crucial for protecting the business from financial losses associated with accidents, damage to vehicles, or liability claims.

Cyberattack Insurance

Also known as cyber insurance or cybersecurity insurance policy is a vital coverage because it protects ghost kitchens from the financial losses and liabilities associated with data breaches and cyber threats. Ghost kitchens mainly operate in a digital landscape and are prone to cyberattacks. Therefore, to safely handle customer data and orders, business owners should purchase adequate cyber insurance. 

With data breach coverage, business owners can rest assured that the costs associated with data breaches, including notification costs, costs related to public relations, and credit monitoring are taken care of. Instead of taking unnecessary risks, business owners are advised to purchase a comprehensive cyberattack insurance policy from a reputable vendor. 

Contingent Business Interruption (CBI)

Contingent business interruption policy protects your business from financial losses resulting from disruptions, for example, if there is a disruption in the supply chain and normal business operations are affected. 

Employment Practices Liability Insurance (EPLI)

Although some ghost kitchens might overlook EPLI, you should consider investing in it. This policy protects small business owners against losses resulting from wrongful termination, harassment, or discrimination. Even though you have a few employees, you should always protect yourself and your business from possible financial losses if you are sued.

Final Words

As ghost kitchens get trendier, more investors will consider investing their money. It is evident that ghost kitchens are more profitable than drive-thrus or traditional restaurants. However, as more investors try to get a piece of the big pie, they overlook the fact that they should purchase the right insurance policies. It is not easy for small business owners to determine the policies they should purchase, especially in a business they do not know much about. 

If you own a ghost kitchen, researching thoroughly is crucial to purchasing the right policy. You should also consider talking to an experienced insurance professional who can assess your specific needs and recommend a tailored insurance package. Call us Today (718)554-3425

Commercial Property Insurance: How to Safeguard Your Business

| NYC Business Group

Commercial Property Insurance: How to Safeguard Your Business

Running a business comes with numerous risks ranging from damage to lawsuits and they can significantly impact your finances. That’s why commercial property insurance is crucial because it provides financial security and protects your business assets. In this article, we will delve into commercial insurance exploring in detail the types of coverages and their importance. Continue reading to learn more about commercial property insurance.

What is Commercial Property Insurance?

Commercial property insurance protects your business’s physical assets from various risks and perils, including theft, vandalism, fire, water damage, and natural disasters. The policy covers equipment, inventory, building, and other crucial assets in business operations.

Therefore, property insurance provides coverage for repairing or replacing damaged or stolen assets. It is also important to note that the policy can cover additional costs. For example, temporary relocation if your business location is uninhabitable. Be that as it may, always talk to your insurance provider to understand the limits of the policy, to avoid paying losses out of your pocket.

Do You Need a Commercial Property Insurance?

Most business owners do not like spending money purchasing an insurance policy because they are always optimistic nothing will happen. Some small business owners purchase the policy for a short period of time and then stop. That is a BIG mistake!

Whether you are a small or large business owner, purchasing commercial property insurance should be a priority. Otherwise, you will have to pay the damages out of pocket. Remember, if you have limited resources, you should take a chance. Instead, purchase the policy to avoid devastating financial risks in the long run.

What Does Commercial Property Insurance Policy Cover?

Property Coverage
  • Buildings: Entails the coverage for the physical structure of the business property, including walls, roof, floors, and built-in fixtures.
  • Business Personal Property (BPP): Protection for the contents inside the building, such as furniture, equipment, inventory, and other business-related items.
Perils Covered
  • Named Perils: Refers to policies that cover specific risks, such as fire, vandalism, theft, and certain natural disasters explicitly listed in the policy.
  • All-Risk (Open Perils): Refers to insurance policies that offer broader coverage to protect against a wide range of perils but at higher premiums.
Additional Coverages
  • Business Interruption (or Business Income) Insurance: Compensation for lost income and operating expenses if the business is forced to shut down or relocate due to a covered loss.
  • Extra Expense Coverage: Reimbursement for additional costs incurred to expedite the resumption of business operations after a covered loss.
  • Equipment Breakdown Coverage: Protection for the cost of repairing or replacing equipment that breaks down due to mechanical or electrical failure

What Are the Exclusions?

Commercial property insurance typically includes coverage for a variety of risks, but there are certain exclusions and limitations. The specific exclusions can vary based on the insurance provider and the policy terms. It's crucial for business owners to carefully review their insurance policies and understand what is not covered. Here are some common exclusions found in commercial property insurance:

Earthquakes and Floods

Many standard commercial property insurance policies do not cover damage caused by earthquakes or floods. Separate policies or endorsements may be required to provide coverage for these perils.

Wear and Tear

Normal wear and tear, deterioration, and damage caused by lack of maintenance or age-related issues are typically excluded. The policy is designed to cover sudden and accidental losses.

Intentional Acts

Damage resulting from intentional and malicious acts by the policyholder or others is generally not covered. This includes acts of vandalism or arson committed by the insured.

Nuclear Hazard

Damage caused by nuclear reactions, nuclear radiation, or radioactive contamination is typically excluded. This may require a separate nuclear hazard policy.

Government Actions

Damage or loss resulting from government actions, such as war, seizure, or condemnation, may be excluded from coverage.

Power Failure

Damage caused by power failure or interruption is often excluded unless it results from a covered peril, such as a lightning strike.

Mechanical Breakdown

Damage caused by mechanical breakdown or failure of equipment without an external cause may be excluded. However, business owners can purchase equipment breakdown coverage as an endorsement.

Pest Infestations

Damage caused by pests, such as termites or rodents, may not be covered because they are not a named peril. Regular maintenance and pest control are important steps to preventing such issues.

Employee Dishonesty

Business owners should understand that losses resulting from dishonest acts committed by employees are not covered under standard commercial property insurance. You may consider purchasing crime insurance to protect against such risks.

Factors That Determine the Cost of a Commercial Property Insurance Policy

Although these factors vary between providers, the common ones include:

Property Value

The value of the insured property, including buildings and business personal property (contents), is a key factor. Higher property values generally result in higher premiums.

Location

The location of the business plays a significant role. Factors such as the local crime rate, proximity to fire stations, and the risk of natural disasters in the area can impact your insurance costs.

Construction and Occupancy

The type of construction (e.g., building materials) and the purpose for which the property is used (occupancy) affect insurance costs. Certain businesses or industries, for example, construction companies may have higher risks, thus attracting higher premiums.

Building Age and Condition

Older buildings may have higher premiums due to potential maintenance and structural issues. On the other hand, well-maintained properties may qualify for lower premiums.

Claims History

A business's claims history, including the frequency and severity of previous claims, can influence insurance premiums. Businesses with a history of frequent or large claims face higher premium costs..

Business Operations and Hazards

The nature of the business and the associated risks impact insurance costs. For example, a manufacturing facility may have different risks than an office space, affecting premiums.

Business Size and Revenue

The size of the business and its annual revenue may be considered when determining premiums. Larger businesses with higher revenues may have higher property values and, consequently, higher premiums.

Industry Type

Certain industries are considered riskier than others, and insurance providers may adjust premiums accordingly to avoid financial losses. High-risk industries may face higher insurance costs.

How to Reduce the Cost of Purchasing Commercial Property Insurance

Here are some of the ways you can mitigate loss and lower your insurance premiums:
Enhance Security Measures

Install security systems, surveillance cameras, access control systems, and alarm systems to reduce the risk of theft or vandalism. Insurance providers may offer discounts for such security measures.

Maintain a Good Loss History

A history of few or no insurance claims can lead to lower premiums. Implement safety measures and policies to minimize the risk of property damage or loss in your business.

Regular Maintenance and Inspections

Regularly inspect and maintain business property or assets to prevent issues that could lead to claims. A well-maintained property is often seen as lower risk by insurers, thus attracting premium discounts.

Bundle Policies

Consider bundling commercial property insurance with other types of business insurance, such as liability or business interruption insurance to get an offer/discount from your insurance company.

Conclusion

Remember, working with an experienced insurance broker or agent can be beneficial in navigating the complexities of commercial property insurance and finding cost-effective solutions tailored to your business's needs. Small business owners should consider working closely with insurance professionals, get detailed information about their property and operations, and compare quotes from different providers to purchase sufficient commercial property insurance coverage for their businesses. Please Give us a call, 718-554-3425, we can provide you with a Free Quote Today!

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