What insurance coverages are you legally required to carry?
As a business owner in New York State, there are some coverages that you are required to have by law, depending on your operations.
If you use a vehicle in your business, you are required to carry auto insurance with certain minimum coverages included. They are as follows:
Bodily Injury Liability - $25,000 per person limit / $50,000 per accident limit
Property Damage Liability - $10,000 per accident
Please understand that these coverages exist to protect others from your negligence in driving a vehicle. If you are negligent and cause injury and/or damage, there is a likelihood that you will be sued. Obviously $25,000 is not going to go very far to protect your assets in a lawsuit. Your agent can probably recommend some limits as a minimum to actually protect you. In fact, our agency will almost always refuse to write a policy at State Minimum limits because we refuse to put our clients at such a financial risk.
Personal Injury Protection (PIP) - $50,000 per person.
This covers you, occupants of your vehicle, pedestrians and/or people loading or unloading your vehicle, regardless of fault for injuries sustained.
You might be thinking, “If hurt while working, wouldn’t workers compensation cover the loss?”. In many cases yes.
But what if you were hurt and were excluded from your own workers compensation coverage? Or if a pedestrian is injured?
An air lift to a hospital on average (based on the claims we see each year) carries a cost of about $65,000. Again, proving that the state minimum limit is simply not enough to protect you.
Uninsured/Underinsured Motorist - $25,000 per person limit / $50,000 per accident limit.
If involved in an accident and you get injured, but the other party is at fault, you can collect under PIP until you reach your limit, then go after the bodily injury liability of the other party. But what if he/she has low limits, or worse, no limits (no coverage at all)? That’s where Uninsured/Underinsured Motorist coverage kicks in.
Though keep in mind that once again, the state minimum is likely not enough to truly protect you.
The key takeaway here? Make certain you have adequate limits. The required state minimums provide a safety net…barely. Your agent should easily be able to give you some claim examples where low limits had adverse effects on the policy holder.
Workers Compensation and Employers Liability
If you employ anyone, NYS, along with most others, requires that you carry a Workers Compensation and Employers Liability policy.
This policy provides coverage for employees who are injured on the job, or fall sick because of some occupational disease. It provides medical expense coverage for the employee as well as coverage for lost wages.
Some business owners are under the misconception that family members are not required to carry workers compensation. In fact; they are required.
New York isn’t very forgiving. According to Section 26-a of workers compensation law… an employer is liable for a penalty of $2,000 per 10-day period of noncompliance, plus the actual award, if injury or sickness occurs (including both compensation and medical costs), plus any other penalties the Board assesses for noncompliance.
In cases involving severely injured employees, the medical costs alone could be in the hundreds of thousands of dollars per injury.
We often see employers who attempt to skirt this law by only hiring “independent contractors” and paying via 1099 rather than w-2. The rating basis for workers compensation is not strictly payroll as many people think…it is remuneration.
You can pay in payroll, service fee, rent or peanuts…it’s still remuneration. If your independent contractor has set hours, uses your premises, your tools or equipment, and doesn’t really work for anyone else…you have a 1099 employee and need to purchase workers compensation.
Closely related to the Workers Compensation policy is:
NY Disability Benefits Law coverage (DBL) and Paid Family Leave (PFL)
NY Disability Benefits covers a percentage of lost wages due to sickness and injury which happen away from work, as well as pregnancy.
Paid Family Leave provides eligible employees with job protection and paid time off for certain qualifying events. Employees can take leave knowing their job is secure, they’re receiving a portion of their salary, and that health benefits are still in place.
Several types of businesses are required by NY State to carry a Bond. Bonds are in fact, not insurance, but rather a financial guarantee instrument. Often, anyone working with alcohol, restaurants, taverns, wineries, liquor stores, distilleries, and breweries are required to carry a bond that guarantees that they will pay taxes which may be owed to the state on the sale of alcohol. Likewise, dealers of automobiles, and mobile homes are also required to carry bonds that guarantee tax payments.
While these may be the required coverages and limits in the state of New York, we urge small businesses to consider additional coverages and more substantial limits to ensure their assets are truly secure.
We recommend contacting an experienced independent agent to analyze your risks and provide the right coverage for your business needs.
If you have questions or are interested in free business insurance quotes, please contact us today.