The National Association of Insurance Commissioners (NAIC), New York, has launched a comprehensive public education program to assist small businesses with information about business risks and insurance options. Under the banner of Insure U for Small Business, the campaign includes an online education site, public service announcements in English and Spanish, and community outreach by public information officers of state insurance departments.
The Insure U for Small Business curriculum, available at www.insureUonline.org/smallbusiness, includes six categories of vital information to small businesses: workers’ compensation; group health and disability; business property and liability; commercial auto; group life and key person life; and home-based business insurance. After reviewing the curriculum’s helpful explanations, tips and considerations, small business owners and managers can test their knowledge about insurance issues by taking an online quiz. Upon successful completion, they can download an Insure U for Small Business diploma.
“Small businesses are a major engine for our national economy, employing millions of Americans and generating immense economic activity,” said Walter Bell, NAIC President and Commissioner of the Alabama Department of Insurance. “Small business owners need to understand the array of business risks they face, as well as how to protect themselves with the right insurance coverage. Insure U for Small Business — supported by state insurance departments across the U.S. — will help small business owners and managers make smarter insurance decisions.”
Research conducted by the NAIC in March revealed that many small businesses — defined as those with fewer than 100 employees — are exposed to serious risks that could be mitigated by a better understanding of insurance options, according to Catherine J. Weatherford, NAIC Executive Vice President and CEO. Key findings of the research show:
- Only 47% of small businesses offer heath insurance to their employees. Of those, 24% report changing the fee structure, deductibles or other components in the past year to offset the rising cost of premiums.
- Only 59% of small businesses with fewer than 20 employees have workers’ compensation insurance, which state law requires for most companies. Workers’ compensation insurance protects business owners from claims by employees who experience a work-related injury or illness.
- Only 35% of small businesses have business interruption insurance, which covers expenses like payroll and utility bills that often continue after a major event (e.g., a fire or storm) shuts down a company. Because rebounding from a disaster can take a considerable amount of time, small businesses need to understand this risk and the available insurance options.
- Only 48% of small businesses carry commercial auto insurance. The others apparently rely on personal auto insurance. However, personal auto insurance policies typically have lower liability limits and may even exclude business-related liability.
- While 71% of small businesses say they are very dependent on one or two key people for their success and viability, only 22% have Key Person life insurance, a type of policy that enables a business to weather the death of a key employee or buy out the key person’s heirs if ownership rights are involved.
- Among home-based businesses — 22% of the NAIC survey — 48% depend on their homeowners insurance to protect their businesses. However, most homeowners insurance policies severely limit coverage of business property and may totally exclude business-related liability claims.
“Insure U for Small Business represents a major commitment by the NAIC and its members — the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories — to help small business owners,” Weatherford said. “It builds on the momentum of the NAIC’s highly successful Insure U consumer education program introduced a year ago.”