How to Get Insurance for a Business with Employees

For a business with employees, a comprehensive insurance plan is no longer just a safeguard for the company’s assets; it is also a fundamental part of its legal and ethical responsibility. A business with employees faces a completely different risk profile than a sole proprietorship, as it must protect its workforce from on-the-job injuries and its business from claims of professional wrongdoing. Getting the right insurance for a business with employees requires a layered approach, with a few key policies forming the core of its risk management strategy.

The most crucial and often legally mandated policy for a business with employees is Workers’ Compensation Insurance. This policy provides medical benefits and lost wages to employees who are injured on the job, regardless of fault. Workers’ compensation laws vary by state, but almost every state requires a business to carry this coverage once it hires its first employee. It protects the business from being sued by an injured employee and provides the employee with a clear path to receiving medical care and financial support. For a business, a strong safety program and a clean claims history can significantly lower workers’ compensation premiums.

Beyond workers’ compensation, a business with employees also needs a robust Commercial General Liability (CGL) policy. While a CGL policy protects the business from third-party lawsuits for bodily injury and property damage, it is even more important with employees, as it extends protection to the business’s actions and operations. It protects the business from a lawsuit if an employee accidentally causes damage to a client’s property or injures a third party while on the job. Without CGL, a business’s assets would be vulnerable to a lawsuit.

For businesses that provide a professional service or offer advice, Professional Liability (Errors & Omissions) Insurance is also a non-negotiable policy. This policy protects the business from lawsuits that result from a mistake or omission in the professional services provided by the business or its employees. For example, if a consulting firm’s employee provides incorrect advice that results in a financial loss for a client, the professional liability policy would cover the legal fees and any resulting settlements. This is a crucial safeguard, as a single error by an employee could result in a massive lawsuit.

Finally, a growing and increasingly important policy for businesses with employees is Employment Practices Liability Insurance (EPLI). This policy protects a business from lawsuits filed by employees for a variety of claims, including:

• Discrimination: A lawsuit alleging that an employee was discriminated against based on their race, gender, religion, or age.
• Sexual Harassment: A lawsuit alleging that an employee was sexually harassed in the workplace.
• Wrongful Termination: A lawsuit alleging that an employee was fired for an illegal reason. EPLI is a vital safeguard, as these types of lawsuits can be financially devastating for a business, even if the claims are baseless. By having a clear human resources policy and an EPLI policy, a business can mitigate these risks and protect itself from a wide range of employee-related lawsuits.