Adjustable Workstations Key to Reducing Injuries

construction workers

Musculoskeletal disorders from manual labor in factories, construction, printing and warehouse work are one of the most common types of workplace injuries and account for one-third of all workers’ compensation costs.

These injuries take a profound economic toll on both workers who suffer these injuries and on employers who pay more for their workers’ comp premiums. There are also indirect costs, such as training replacement personnel, retraining workers, lost productivity and reduced morale.

To reduce the chances of MSDs among your workers, make sure their workstations are ergonomically designed and optimized for safety and efficiency of use.

One of the best ways to reduce these types of injuries is to ensure that workers of different sizes and physical limitations can work in the same area without straining themselves and developing an MSD.

The height of the work area is a significant factor in these types of injuries. Usually the height is stationary, but one size does not fit all. Someone who is too short or too tall for a standing work area will have to strain to work in a position that is not optimal.

The adjustable workstation

While for some workstations a standard size cannot be avoided, in many cases it’s best to have workstations with adjustable heights. Height adjustability is useful not only for very tall or very short people, though.

For specific tasks, the ability to adjust the bench top to the application may help workers of all sizes execute tasks more ergonomically.

An adjustable workspace can accommodate the majority of workers in ways that reduce stresses and strains, whether they differ by height, reach capabilities, strength or flexibility. If you have an adjustable workspace, a tall and short worker can use the same work area by simply adjusting the height when they start their shift.

Avoiding neck strains

Besides a workspace that moves up and down, you should also make sure that the worker doesn’t have to strain to read documents or screens or type on a keyboard, such as when they are sitting on the surface of the workstation.

While this may seem like a small thing, a worker who has to look down at an extreme angle at papers or a screen on a table every day for years can develop neck disorders and injuries. They may not be as severe as a sprain or a strain, but they can still impair the individual’s ability to work ― and over time could require surgery and rehab.

Sometimes the solution is simple, such as using a height-adjustable arm to hold documents or a screen. You can also have an articulating keyboard tray that moves up and down so the worker can adjust it at an optimal height and not have to strain to type.

These solutions are inexpensive and will reduce the chances of employees straining to read documents or screens or type. Using these simple tools will also make your workers more efficient. Like height adjustability, these arms will work for people of various heights and sizes.

The takeaway

The key to ergonomics is to make the environment fit the worker, not vice versa. This can be accomplished in many ways, ranging from facility design to equipment specification to process design.

By homing in on the workstation, you can greatly reduce the chances of your workers developing an MSD.

More Older Workers’ Comp Claims Being Settled as COVID-19 Brings Uncertainty

One bit of good news coming from the COVID-19 pandemic is that the economic downturn has boosted efforts to close older workers’ comp claims that have been lingering as both sides cannot agree on a settlement.

Due to the financial pain brought on by the sudden downturn, injured workers who have been reluctant to settle their claims have been coming forward to close them, according to workers’ comp attorneys.

The injured workers are often settling their claims for less than they were demanding before. One lawyer told Business Insurance magazine that he was seeing claimants come in with offers that were on average 10% lower than previously.

This is an important development for employers who have legacy workers’ compensation claims that have stayed open as the injured worker remains on permanent disability and may also still be receiving ongoing or sporadic medical treatment. Employers want to close these claims because the longer they stay open, the more they end up costing the insurer, and hence it drives up the employer’s workers’ comp costs.

One of the most unpredictable parts of older claims is unexpected adverse claims cost development, particularly if the injured worker develops new medical complications that are an outgrowth of or related to the original injury claim.

When that happens, the workers’ comp carrier will also have to pick up the tab for that treatment, further driving up the cost of the claim and affecting the employer’s workers’ comp experience.

Work with your insurer

In a white paper, global insurance giant Marsh recommends that employers try to work with their insurers to proactively settle these older claims to save money in the near and long term, and to reduce the prospects of the claim deteriorating further given the “uncertainty about the post-COVID-19 economic environment.”

Marsh said that businesses should take a strategic approach to closing these old claims by working with their insurer’s claims adjuster and using analytics and claims inventory management tools to identify complex claims and focus on settling them first.

Another smart move is to stay in close contact with injured employees to help them navigate the workers’ comp system. And if they are at home on the mend, the employer should make a point to regularly reach out to them to see how they are healing up and if they have questions about their claim and the process for returning work.

This is one of the best ways to reduce the chances of an injured worker becoming disgruntled and hiring a lawyer to litigate their claim, which will usually drive up the cost of the claim in addition to the time they are away on workers’ comp disability.

Insurers are also feeling the effects of the COVID-19-related economic downturn, which gives them an incentive to try to settle old claims so they don’t have that uncertainty of how much they will eventually end up paying for the claim.

The downturn has also forced some insurers to consider laying off claims representatives as they deal with the prospect of lower premium volumes.

Injured workers may also have an incentive to get their claims closed by receiving a lump-sum payment now, which they may need due to the poor economic environment.

The takeaway

If you have any legacy workers’ comp claims that are still being paid, you may want to consider reaching out to your insurer to see if there is a possibility of getting the injured worker to renegotiate a settlement so you can get the claim closed. The longer it stays open and because of the uncertainty brought on by the pandemic, it would behoove any employer to take this step.

Testing Workers for COVID-19 Raises Privacy, Discrimination Issues

COVID-19 testing

Employers whose businesses continue to operate are obviously concerned about the coronavirus spreading through their worksites, so many have started testing their workers.

Recent U.S. Equal Employment Opportunity Commission guidance authorized employers to conduct COVID-19 testing and check temperatures of employees. But doing so could expose a business to a number of employee legal actions from invasion of privacy to discrimination and wage and hour charges, say employment law attorneys.

While the EEOC guidance refers to existing Americans with Disabilities Act regulations requiring that any mandatory medical test of employees be “job related and consistent with business necessity,” it left many questions unanswered.

So, if you decide to start testing workers, you will have to navigate a number of issues, such as:

  • Which tests are appropriate?
  • What are the standards for protecting workers’ privacy?
  • Should employees be paid for the time they wait in line to be tested?
  • Should you get written consent?
  • How will you ensure that the policy is applied consistently?

Employment law experts say there is often a surge in employee lawsuits when new rules or guidance are being issued, and more so with such a sensitive issue as one’s health during a pandemic.

The kinds of claims that employers may see as a result of employee testing include:

  • Invasion of privacy
  • Failure to protect employees’ personal health information
  • Discrimination
  • Retaliation
  • Wage and hour actions if waiting for testing takes time.

What you can do

Typically, employers would not be allowed to test a worker’s temperature for a specific disease, but these are unusual times and the threat of infection is too great.

Most lawyers are interpreting the EEOC guidance as meaning that employers may take steps to determine whether employees entering the workplace have COVID-19 because an individual with the coronavirus will pose a direct threat to the health of others. Therefore, an employer may choose to administer COVID-19 testing to employees before they enter the workplace to determine if they have the virus.

To cover your bases, you should plan your testing in detail, including:

  • How you will be conducting tests (providing at-home test swab kits, testing upon arrival, or offsite).
  • Designate a person who is authorized to conduct tests.
  • Document how you will be administering tests.
  • Plan for how you will account for false positives or false negatives.
  • Decide how often should you be testing.
  • Budget for the testing.
  • What will you do if a worker tests positive or has a fever (if you are just checking temperatures)?
  • Don’t have exceptions to the policy or, if you do, keep them to a minimum. The more exceptions to a policy, the more likely you are to be sued.
  • The policy should comply with guidance from the Centers for Disease Control and Prevention, such as using non-contact thermometers and ensuring social distancing during the process.

Insurance

The risk of being sued when administering testing is real and you should do everything you can to make sure it’s carried out fairly and consistently. But even if you do everything by the book, you can still be sued.

During bad economic times when people are losing their jobs, employee lawsuits tend to rise and, even if you are eventually found to have acted within the confines of the law, you still have to pay the legal fees.

One type of policy that could step in to protect you is employment practices liability insurance. EPLI will cover awards and legal costs in employee-initiated lawsuits. Each policy is different though, so it’s best to consult with us first.

If you are testing or are considering testing your staff, you may want to consider it.

Workers Get Workers’ Comp Presumption for COVID-19

covid-19 workers

California Gov. Gavin Newsom has issued an executive order requiring that workers who either test positive for COVID-19 or are diagnosed by a physician as having coronavirus are eligible for workers’ compensation benefits.

The order means that it will automatically be presumed that the employee contracted the virus on the job if they test positive or receive a diagnosis within 14 days of their last shift.

Additionally, the employee must have been working at a worksite and not from home to qualify, and the diagnosis must be confirmed by testing within 30 days of the original diagnosis.

The order covers any worker that reports to a worksite, including “essential workers,” which include those in health care, emergency services, trucking, construction, food, warehousing, delivery, and more.

Workers’ comp benefits include partial wage replacement for any missed time from work, as well as covering all related medical costs and death benefits for their family should the unthinkable happen.

If the employer believes an employee didn’t contract the virus at work, they will have the burden of proving the individual contracted the virus elsewhere, which would be a difficult endeavor.

The rule is temporary and will cover cases dating back to March 19. It will sunset on July 6 (60 days after the announcement was made on May 6).

No adverse X-Mod effects

While the order will make it easier for essential workers to file workers’ comp claims, employers do not have to worry about the effects on their workers’ compensation claims experience.

That’s because the Workers’ Compensation Insurance Rating Bureau has proposed its own rules that would exempt any COVID-19 claims from an employer’s claims history, so that it would not affect their experience modifier (X-Mod).

That means if an employer has any workers who file COVID-19 claims, their premiums would not rise due to those claims.

The proposal will be reviewed by the Department of Insurance in May and it’s likely, according to industry observers, that it will be approved. It too will sunset 30 days after shelter-at-home orders are lifted.

The Rating Bureau estimates that the cost of COVID-19 workers’ compensation claims in California could range from $2.2 billion to $33.6 billion annually. A mid-range estimate of $11.2 billion would equate to more than 60% of all California workers’ comp annual claims before the pandemic.

State Fund to Accept All COVID-19 Claims by Essential Workers

essential worker

State Compensation Insurance Fund has announced that it will accept any workers’ comp claims for a diagnosed case of COVID-19 filed by essential workers.

Workers deemed “essential” who contract COVID-19 would be presumed to have caught the virus at work, and hence would be eligible for all normal workers’ comp benefits under the law.

Only workers for employers who are insured by State Fund will benefit from the decision by the insurer. But that could change.

Gov. Gavin Newsom is considering issuing an executive order that would require a presumption that any case of infection by an essential worker is work-related and eligible for workers’ compensation benefits. That would include partial wage replacement for any missed time from work, as well as covering all related medical costs and death benefits for their family should the unthinkable happen.

State Fund had earlier created the Essential Worker Support Fund to partially cover any workers it insures, but the new action replaces that fund so that workers who file COVID-19 claims are entitled to all the same benefits (indemnity for lost wages and medical costs related to treating the virus, including hospitalization if needed).

“We currently estimate these added benefits will require approximately … $115 million,” State Fund said in its announcement, adding, “We will still provide temporary disability benefits to any covered essential worker who must self-quarantine if they are not covered by another source.”

State Fund’s new rule only applies to cases that were filed by essential workers who have been on the job since Newsom issued the shelter-at-home order on May 19. The rule will be pulled once the order is lifted.

Essential employees include those who work in food, warehousing, delivery, agriculture, health care, energy, emergency services, and more.

Good news for workers, employers

The move by State Fund and the possible executive order are good news for workers as well as employers. Any essential worker that currently contracts COVID-19 would otherwise have a steep hill to climb in trying to prove that they caught it at work unless they are health care workers or first responders.

Not only that, but the case can get tied up if the employer challenges the claim and it goes to the Workers’ Compensation Appeals Board for adjudication.

It would be good news for employers too, as the Workers’ Compensation Insurance Rating Bureau has proposed its own rules that would exempt any COVID-19 claims from an employer’s claims history so that it would not affect their experience modifier (X-Mod).

That means if an employer has any employees who file COVID-19 claims, their premiums would not rise due to those claims.

The Rating Bureau estimates that the cost of COVID-19 claims in California could range from $2.2 billion to $33.6 billion annually. A mid-range estimate of $11.2 billion would equate to more than 60% of all California workers’ comp annual claims before the pandemic.

Protecting Your Workers During the Pandemic

covid-19 workers

If you are one of the companies that has been deemed an essential employer and are remaining open during stay-at-home orders, you should be doing all you can to protect your workers against contracting COVID-19.

While some workers are really on the front lines of fighting the disease, like health care workers and emergency services personnel, there are many other people working in factories, grocery stores, warehouse and transportation, among other industries, that are also at risk to varying degrees.

The response to this has been varied. Some employers have taken steps to protect their workers. For example, some grocery stores have supplied cashiers with masks, face shields or plexiglass barriers between them and customers.

But not all employers are taking those steps and that’s ignited worker protests through a swath of industries:

  • After a mechanic tested positive for COVID-19, half the employees at his workplace stayed home to press the employer to clean the entire worksite before they would return.
  • Workers staged a walkout at a truck manufacturing facility because the company was not supplying them with hot water for washing their hands.
  • Bus drivers went on strike, saying the city they work for wasn’t doing enough to protect them.
  • 200 employees walked out of one warehouse after a worker tested positive for COVID-19.

Employers need to be careful, as failing to provide adequate protections against coronavirus to their workers could result in lawsuits and subsequent penalties if OSHA decides to strictly enforce its General Duty Clause.

What you can do

Facilities will vary in their own risks, but the following are some general areas that all employers should consider to reduce the risk or spread of infection in their workplaces, regardless of whether they are a large high-traffic facility like a food warehouse or a small hardware or specialty grocery store:

Providing personal protective equipment — This can range from gloves and masks to face shields.

Protective barriers or partitions — These could be partitions made of plexiglass so workers can communicate and make eye contact.

Air circulation — If you have fans or air conditioning units blowing, take steps to minimize air from fans blowing from one worker directly at another.

Spacing — Require employees to work at least 6 feet apart.

Hygiene — Place handwashing stations with hot water and soap or hand sanitizers with at least 60% alcohol in multiple locations, in order to encourage good hand hygiene. Also urge workers to avoid touching their faces.

Customer handling — Use rope-and-stanchion systems to keep customers from queueing or congregating near work areas. Mark spots on the floor spaced 6 feet apart to ensure social distancing.

Consider restricting the number of customers allowed inside the facility at any point in time. Also, consider options for increasing in-store pickup or delivery to minimize the number of customers shopping in store facilities.

Cleaning — Disinfect frequently touched surfaces in workspaces as well as doorknobs, buttons and controls. If you have customers entering your facilities, disinfect all public-facing areas, such as points of sale and service counters.

Employee issues — Add additional clock in/out stations. If possible, these should be spaced apart to reduce crowding in these areas.

Staggering schedules — Stagger workers’ arrival and departure times to avoid congregations of employees in parking areas, locker rooms and near time clocks. Stagger lunches as well, to avoid overcrowding in general areas where employees may often eat. If you have an area frequently used for lunches, make sure you enforce 6-feet spacing in that location too.

Keeping virus at bay — Actively encourage sick employees to stay home. Check temperatures of workers upon arrival — and consider checking customers’ temperatures too. If anybody is running a fever, they should not be allowed into the facility and should be asked to go home and call their doctor.

Want to know more?

OSHA has a fantastic COVID-19 resource page that outlines safety procedures that employers in a number of industries can implement to reduce the chance of transmission between workers, as well as between workers and customers. You can find it here.

How to Protect Your Business Teleconference Meetings

teleconference

Since face-to-face meetings are out of the question when most non-essential workers are under stay-at-home orders, many companies have opted for the teleconferencing app Zoom.

With the recent revelation that Zoom’s teleconferencing system is not always the most secure, it is still one of the least expensive and user-friendly options for holding meetings during the coronavirus outbreak.

Zoom has seen its user numbers exploded during the pandemic, but that has left it exposed to a number of different types of attacks and other problems like videos being exposed on the web. There are many alternatives to Zoom, but if you want to continue using the service, you should understand the security implications and what you can do to protect yourself, other participants and your company.

The risks

Because of complaints, Zoom in mid-April said it was working to fix a number of bugs and security holes in its system.

While some issues have plagued the system for a few years, others were recently discovered as usage surged in the first three months of 2020. Here’s a list:

Stolen passwords — One of the more recent vulnerabilities that was discovered was one that allowed hackers to steal Windows passwords.

Eavesdropping — Two other newly discovered holes could let hackers remotely install malware on affected Macs and eavesdrop on meetings.

Phishing attacks — Hackers are creating fake Zoom links and websites to lure people to log in. In so doing they can steal financial details, spread malware and steal Zoom ID numbers and passwords, which allows them to infiltrate meetings.

‘Zoombombing’ — This occurs when uninvited guests gain entry to private meetings. This typically happens for large events after log-in details were announced on social media, but it is happening in smaller meetings as well. Typically, these infiltrators will disrupt the meeting with profanities and insults or by streaming porn for the other participants to see.

Hackers are using the same techniques to eavesdrop on or disrupt business meetings.

Meeting recordings exposed — This can only happen if the meeting organizer records the meeting. A Washington Post investigation found thousands of private Zoom videos that had been posted on the web. The exposed video calls included private business discussions, casual conversations with friends, therapy sessions, and nudity. Many of these videos seem to have been made public by mistake.

Meetings are typically not recorded. The default setting on Zoom does not record meetings. But meeting hosts can save the videos on Zoom’s servers or their own computers without participants’ consent.

Tips to keep your Zoom meetings private

  • Don’t post your Zoom meeting IDs publicly. Send them privately by e-mails or using a messaging app.
  • Create a new ID for every meeting. Don’t recycle old ones from prior meetings.
  • Adjust the Zoom settings to require participants to enter a password to access the meeting.
  • Enable Zoom’s “Waiting Room” feature. This lets you keep participants in a digital queue until you approve them to join the session. Beginning April 4, Zoom enabled the feature by default, requiring additional password settings for free users. Zoom has a guide to the feature on its website.
  • If you are worried about abuse, you can turn off a number of features, such as private chats, annotation and file transfers.
  • Keep the Zoom desktop app up to date, so that any patches Zoom makes to security vulnerabilities are added to your device.
  • If you are concerned about hackers accessing your data and you don’t need to screen share, you may want to use Zoom only on mobile devices such as a smartphone or tablet. These seem to be less susceptible to hacking.
  • Build awareness of Zoom phishing scams into user training programs. Users should only download the Zoom client from a trusted site and check for anything suspicious in the meeting URL when joining a meeting.
  • Ensure all home workers have anti-malware protection, including phishing detection installed from a reputable vendor.

 

Insurers Ordered to Refund Premiums Due to Outbreak

refund

California’s insurance commissioner has ordered insurers doing business in the state to refund some premium payments to policyholders for a number of commercial lines, as well as personal auto insurance policies, due to the reduced risk of claims in light of the COVID-19 outbreak and shelter-at-home orders.

Commissioner Ricardo Lara issued the notice, which requires insurers to “make an initial premium refund for the months of March and April” to affected California policyholders as quickly as practicable, and no later than within 120 days.

Lara’s notice covers premiums paid for at least the months of March and April ― including the month of May if “shelter-in-place” restrictions continue ― in the following lines of insurance:

  • Commercial automobile,
  • Workers’ compensation,
  • Commercial multi-peril,
  • Commercial liability,
  • Medical malpractice,
  • Private passenger automobile, and
  • Any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.

The order was made to reflect the reduced risks across the board. For example, with fewer people driving, the risk of accidents has fallen dramatically and, with fewer people working, the risk of workplace injuries has also plummeted.

The order gives insurance carriers flexibility in how to handle the refunds, including providing a premium credit, reduction, return of premium or other appropriate premium adjustments within 60 days of the notice, which was issued April 13.

In making the announcement, Lara cited a study by UC Davis which found that reduced driving has resulted in fewer accidents, injuries, and fatalities on the roads. Declining payroll and receipts due to closure orders have also dramatically reduced the risk of a liability loss for businesses.

The order comes on the heels of a handful of insurance companies that have voluntarily offered premium refunds or discounts to policyholders because the risk of claims has fallen due to the pandemic and shelter-at-home orders.

For example, Chubb announced that small policyholders whose policies will renew between April 1 and Aug. 1, will see a 25% reduction in the sales and payroll exposures used to calculate their premium, as well as a 15% reduction in premiums for commercial auto policies.

Additionally, several auto insurance companies have recently announced voluntary premium refunds to drivers.

Meanwhile, State Compensation Insurance Fund (State Fund) announced in late March that it had placed a moratorium on policy cancellations and late payment penalties. It will also extend credit to any business negatively impacted by COVID-19 events and offer businesses the ability to adjust their payroll reporting.

The takeaway

Lara said this was just the first announcement on the issue. The Department of Insurance may issue further notices if the stay-at-home order continues beyond May.

CARES Act Helps Coronavirus-affected Employers, Employees Alike

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act stimulus law to help American workers and businesses weather the outbreak has a number of provisions that employers and their workers need to know about and can take advantage of during this crisis.

The CARES Act includes provision for:

  • Extended unemployment benefits.
  • Requiring health plans to cover COVID-19-related costs.
  • Small Business Administration (SBA) disaster loans.
  • Loans for large corporations.

Parts of the CARES Act will likely benefit your organization and employees in some way. Here’s what you need to know:

Extended unemployment

The CARES Act extends unemployment insurance benefits to workers, as long as they lost their jobs due to the outbreak.

Unemployment benefits under the CARES Act also apply to furloughed employees.

Workers in California will be able to collect both state unemployment and federal unemployment through the new law.

Under existing state law, workers who have lost their jobs can already receive regular unemployment benefits of between $40 and $450 per week, depending on their highest-earning quarter in a 12-month period beginning and ending before they apply for benefits with the state Employment Development Department. These benefits can last for up to 26 weeks.

The Pandemic Emergency Compensation program funded by the CARES Act will provide an additional $600 per week on top of state unemployment benefits, through July 31.

The law extends state-level unemployment by an additional 13 weeks. For example, whereas most of California’s unemployment benefits last 26 weeks, the bill extends state benefits to 39 weeks. The extended benefits will last through Dec. 31.

Health plan changes

Under the CARES Act, employer-sponsored group health plans must provide for covered workers — without cost-sharing or out-of-pocket expenses — the cost of COVID-19 testing, treatment and vaccinations when and if they become available.

SBA loans

The CARES Act provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs. It also offers loans of up to $10 million to companies that employ fewer than 500 people to cover payroll and expenses between February 15 and June 30. Some of the main provisions are:

  • Small businesses may take out loans up to $10 million—limited to a formula tied to payroll costs—and can cover employees making up to $100,000 per year.
  • The loans can be forgiven as long as a business meets certain conditions, such as using most of the funds to pay salaries for the eight weeks following the loan closing.
  • Entities eligible for loans include small businesses, nonprofit organizations, sole proprietors, independent contractors, and other self-employed individuals.
  • Borrowers who have received an SBA Economic Injury Disaster Loan for the same purpose do not qualify for the Paycheck Protection program (PPP).

Mid-sized employers

Under the CARES Act, the Secretary of the Treasury is authorized to implement financial assistance programs which specifically target mid-size employers with between 500 and 10,000 employees.

Loans would not have an annualized interest rate higher than 2% and principal and interest will not be due and payable for at least six months after the loan is made. But unlike loans under the PPP, these are not forgivable.

Large employers

The CARES Act provides $500 billion to the Treasury Department’s Exchange Stabilization Fund for loans and other funding for large companies and corporations affected by the outbreak.

  • $454 billion is set aside for loans, loan guarantees.
  • Companies that receive funds are prohibited from using them for stock buybacks.
  • Loans include terms limiting employee compensation and severance pay.

Like loans for mid-sized employers, they are not forgivable.

Why You Need ‘Key Man’ Insurance

board meeting

If you are operating a small business, you are likely relying on a small crew to get the job done.

Many employees in small firms have to wear several hats and, if one of them or an owner should die, the business could suffer greatly from that sudden loss of talent or one of the owners who is integral to the operations.

If you don’t have “key man” insurance, that setback could be devastating to the viability of your operations, whereas coverage would provide you with extra funding that you would need while recovering from the loss.

Key man insurance is simply life insurance on the key person in a business. In a small business, this is usually the owner, the founders or perhaps a key employee or two. These are the people who are crucial to a business ― the ones whose absence would sink the company. You need key man insurance on those people.

Key man insurance basics

Before purchasing coverage, give some thought to the effects on your company of possibly losing certain partners or employees.

In opting for this type of coverage, your company would take out life insurance on the key individuals, pay the premiums and designate itself as the beneficiary of the policy. If that person unexpectedly dies, the company receives the claim payout.

This payout would essentially allow your business to stay afloat as you recover from the sudden loss of that employee or partner, without whom it would be difficult to keep the business operating in the short term.

Your company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner.

In other words, in the aftermath of this tragedy, the insurance would give you more options than immediate bankruptcy.

Determining whom to cover

Ask yourself: Who is irreplaceable in the short term?

In many small businesses, it is the founder who holds the company together ― he or she may keep the books, manage the employees, handle the key customers, and so on. If that person is gone, the business pretty much stops.

Determining the amount of coverage

  • The amount of coverage depends on your business and revenue.
  • Think of how much money your business would need to survive until it could replace the key person, come up to speed and get the business back on its feet.
  • Buy a policy that fits into your budget and will address your short-term cash needs in case of tragedy.
  • Ask us to get some quotes from different insurers.
  • Check rates for different levels of coverage ($100,000, $500,000, etc.)