Do You Need Small Business Life Insurance?

 

Anyone with a family, who has people depending on his or her income for their living expenses, needs life insurance to help meet those needs in the event of an untimely death.  Proceeds from a life insurance payoff can be used to replace the income lost when the breadwinner passes away.

If you're a small business owner, business life insurance also has an important place in your financial security plan.  While life insurance needs are unique to everyone, if you own a small business and have a desire to protect both your family members and your business interests should you experience a premature death, you need coverage that protects your concerns from every angle.

An unexpected death can upset the stability of both your family and your business from a financial standpoint.  Preparing beforehand with the right type and amount of life insurance can provide assurance that, should you die prematurely, you'll be able to adequately meet your current financial obligations.

One Policy or More?

If your small business is a sole proprietorship, a personal life insurance policy of adequate amount may be enough to cover your family's needs and your business liabilities after your death.  This may be especially true if the plan is for someone in your family to take over your business.

In most cases, however, it would be prudent to have two separate life insurance policies: one for your family and one for your business.  A business life insurance policy can serve a number of purposes:, such as: 

• Paying back loans that were taken out to get the business started or for later expansion.  Repaying these loans is especially important if personal property such as your house was used as collateral.
• Covering the cost of replacing a key employee, including you, the owner.
• Severance pay for staff in the event the business closes.
• Paying off buy-sell agreements.

Key Man (or Key Woman) Insurance

Key person insurance was specially designed for when the owner or very valuable employee of a business dies and financial support is needed to keep things running until the business can get back on its feet.  The number one salesperson, for example, may be responsible for the majority of business and, if he or she unexpectedly dies, it could take some time to replace that person and business profits may decline significantly during this time.  Insurance money can offer stability during this time.

Is the Bare Minimum Car Insurance Okay?

 

Buying a car can be an expensive prospect, especially when buying a new vehicle, and car payments are just the beginning.  There are also various fees that must be paid, such as the cost for getting the vehicle registered and, of course, the cost of insurance.

When buying your Greensboro car insurance, you'll learn that there are two classifications:

1. Car insurance required by North Carolina law for all vehicles operated on public roads
2. Optional car insurance not required by law but recommended for your protection

Insurance Required By Law

All but a couple of U.S. states mandate a certain amount of car insurance for drivers.  Each state has their own requirements regarding types and minimum amounts of coverage required, but the main focus is for bodily injury liability and property damage liability coverages.  Some states also require protection against uninsured drivers and for Personal Injury Protection (PIP) insurance.

In North Carolina, the legal requirement  is for a minimum of $30,000 per person bodily injury liability protection per accident, $60,000 for all persons in bodily injury liability protection per accident and $25,000 in liability coverage for property damage.  You're also required to have the same dollar amounts ($30K/$60K/$25K) in uninsured/underinsured motorist coverage.

Why Carrying Bare Minimum Car Insurance Is a Bad Idea

Required liability coverage is meant for "the other guy" involved in an accident that you cause.  The money paid out goes to help pay towards injuries and/or property damage sustained as a result of your driving errors.  There are two major problems to consider regarding this "bare minimum" coverage.

1. Your Greensboro car insurance liability coverage does nothing to pay for your injuries or property damage.  To be protected for your own losses in an accident you've caused, you must add certain optional coverage to your insurance policy such as collision coverage, personal injury protection (PIP) or medical  payments coverage.
2. The bodily injury and property damage liability amounts required by law are extremely low compared to actual costs typically seen as a result of an auto accident claim.  If an accident you cause seriously injures a third party and they require significant medical services, charges can amount to tens or hundreds of thousands of dollars.  Multiply this by the number of passengers injured from the other car and you can see how woefully inadequate "bare minimum" coverage is.  Experts suggest you should carry five or ten times the minimum required.

4 Tips for Preventing Small Business Insurance Claims

 

Small business owners are responsible for many things geared toward making their business a success and, as a small business owner, you're responsible not only for increased sales and cost reductions but also for managing risk.  A big part of managing risk is to be covered by a comprehensive small business insurance policy that protects you from suffering a variety of losses, one of which may be liability lawsuits.

Your Greensboro small business insurance policy is absolutely something you want to have but also something you never want to have to use.  Without proper protection, however, a serious claim against your business could essentially close down your complete operation.  But smaller claims such as those for a slip and small injury, which is one of the most common, or theft of merchandise or equipment, are not only troublesome but can cost you money in the form of higher premiums.

Tips for Preventing Small Business Insurance Claims

Here are some things you can use to help prevent small business insurance claims:

1. Burglary and theft are the most frequent causes of property loss claims submitted by small businesses, accounting for about 20% of all claims filed.  The best way to mitigate these losses is to introduce some simple security measures such as sturdy locks for all doors and windows and also for any sensitive areas.  High-quality electronic surveillance equipment can be used to guard your business both during and after business hours.  If your employees make bank deposits, it's a good idea to incorporate the buddy system.  Employee dishonesty can be countered by providing a good working environment and fostering high employee morale.
2. Slip-and-Fall Injuries are some of the most common injuries for which claims are made against small businesses.  The more foot traffic your business has, the more vulnerable you are to facing this liability claim.  Good housekeeping is a primary factor in avoiding these injuries.  Inspect for and repair any loose steps or handrails.  Slippery floors should be well marked and any clutter should be avoided.
3. Other injuries caused by unstable product displays or heavy goods falling from high shelves may be alleviated by regular inspections to prevent these problems.
4. Businesses that use vehicles as part of doing business can be held liable if one of these vehicles becomes the cause of an injury or property damage.  Only qualified persons should operate these vehicles and regular driver training should be provided.  

Is Your Teen Really Ready to Drive? 4 Considerations

 

When your youngster is a teenager and wants to drive, it's important that they understand an important concept.  While driving may be a teen's rite of passage, it shouldn't be considered a right, but rather a privilege, which must be earned.  As a parent, what you want to ask yourself is, at their current stage of development, is your teen ready to take on the responsibility involved with driving.

While age is a primary factor in determining who can drive, it's by no means the only factor.  It doesn't matter if your son or daughter is old enough to drive legally if they're not mature enough and responsible enough to handle what's required to drive a large motorized vehicle capable of causing death and destruction in the wrong hands.

Teen years can be a very challenging time in many ways, including:

• Learning to deal with emotional stress
• Academic stress
• Peer pressure
• Problems with parents

Some teens may be capable of handling the responsibility of driving at age 15, while others may be lacking in necessary judgement even at age 18 and beyond.  As the parent, this is on you to determine, keeping in mind that one of your prime duties is to keep your child safe from harm.

North Carolina Teen Drivers

The State of NC has one of the safest and most comprehensive licensing systems for teen drivers of any state.  It's a three-level graduated system that allows teens aged 15 to get a learner's permit after fulfilling several requirements.  See those requirements here.  Then the teen works his or her way up toward receiving a full provisional license.

Considerations to Help Determine Your Teen's Readiness To Drive

1. Does your teen consciously know what's going on around him and act/react accordingly?  Does he have good peripheral vision and the ability to predict the behavior of others?
2. Driving competency must include the ability to be alert and tuned into one's own surroundings; to be a defensive driver, immediately reacting to all situations involving other drivers' behaviors.
3. How well does your teen follow rules and regulations?  Do they respect authority and keep their word?  A teen who defies authority and can't follow rules might not be ready to take on the responsibility of driving.
4. Does your teen have good manners and a good general attitude?

Can Business Insurance Be Written Off?

 

We sometimes hear questions from businesses here in the Greensboro area regarding business insurance and whether or not it can be written off your taxes.  According to the IRS, expenses are fully deductible, including insurance premiums, if they fit the following criteria:

1. The business must be operated "for profit"
2. The insurance costs being deducted must be for insurance that is "both ordinary and necessary"

An ordinary business expense is one that's commonly accepted in your industry.  A necessary business expense is one that's viewed as being appropriate and helpful for your business.

Business Insurance Premiums

According to the IRS, as a business owner, you can deduct the the necessary and ordinary cost of insurance premiums if the insurance is for your business.  There are a number of common business insurance policies that qualify, including:

• General Liability Insurance
• Professional Liability Insurance
• Commercial Property Insurance
• Data Breach Insurance
• Workman's Compensation Insurance and more

These are all policies designed to help protect your business and, if they are considered necessary and ordinary in your particular industry, then the full costs are likely deductible.

Seek a Tax Professional

There are a number of business insurance costs that may be tax deductible and certain policies don't qualify as being deductible.  The best advice is to seek the counsel of a tax professional to determine the difference.  This will help take the guesswork out of which insurance you carry and which are considered actual business expenses.  

If the insurance coverage you want to write off isn't considered necessary and ordinary by the IRS, then they won't consider it a business expense and it can't be written off.  The following types of insurance generally cannot be written off:

• Policies that are designed to help cover lost earnings due to disability or illness
• Life insurance policies
• Self-insured reserves
• Policies taken out to help secure a loan

Business vs. Personal Expenses

While there is no allowance for deducting personal or living expenses, some things used for business and personal use may be partially deductible on your taxes.  An example of this would be your car insurance if you use your car for both personal and business use.  Keeping track of your mileage, you can calculate the percentage you've used your car for business during the year, then at tax time deduct that percentage of your insurance premium cost.  Business use of your home may also provide a partial deduction.

Are Homeowners Insurance Payouts Taxable?

 

When receiving homeowners insurance payouts after an insurance claim has been settled, sometimes our Greensboro area clients question whether or not those payouts are taxable.  The answer is generally "no," insurance payouts are not taxable, with a few exceptions.

Not For Profit

Insurance is designed, as is said in the industry,  to "make you whole."  This simply means that an insurance payout on your homeowners policy is meant to put you back where you were before suffering the loss for which your claim has been made.  Homeowners insurance is not intended to compensate you for any more than you had before your loss was experienced and your claim was made and paid.  In fact, for a risk to be considered insurable, the opportunity for loss must be present but the opportunity for financial gain must be absent.

Taxable Homeowners Insurance Payouts

An exception to the non-taxability of homeowners insurance payouts relates to homeowners suffering a loss who decide to do the necessary repairs themselves.  The question of whether or not you're allowed to do your own repair work is basically up to your insurer.  They may be more likely to allow this for a relatively simple job that doesn't require some specialized skill such as that for plumbing, electrical or re-roofing work.

A few caveats regarding doing your own repairs for an insurance claim:

• You may not save much money by doing your own work on an insurance claim
• You may need to be licensed to carry out certain work such as plumbing or electrical
• Work that doesn't turn out as planned may face additional costs that your insurer won't cover
• If you're carrying a mortgage on your home, your mortgage lender likely has a say in who performs the repair work on your home.
• Your insurer will likely inspect and value the damage for which you're submitting a claim.  Once this is done, get an estimate from a professional contractor who may spot damage not obvious to you.  Get them to provide a professional estimate for repairs, which you can use when negotiating with your insurer for your final payout.

Labor Costs May Be Taxable

Once your insurance payout has been made, any amount over and above the cost of material for the repairs may be considered labor, which was provided by you.  In the eyes of the IRS, this money may be seen as taxable income to you.

Car Insurance Trackers: What Data is Tracked?

 

Many vehicle insurance companies are now offering policy price discounts for clients who volunteer to equip their car or truck with an insurance tracking system.  Historically, car insurance companies have relied on various demographic information in order to determine the likelihood of a policy applicant making future claims.  This began with the creation of tables, known as actuarial tables, notating the number of vehicle accidents by location, by driver's gender, age, type of vehicle and more.

Then, when you were applying for insurance coverage, your personal driving history, including driving infractions and any past claims, were added to those statistics.  Driving history proved to be a good indicator of future potential claims.

While these actuarial tables remain an important part of your car insurance underwriting, determining whether or not to sell you a policy and at what premium rate, car insurance trackers add another level of accuracy to this process.

What is a Car Insurance Tracker?

Car insurance trackers were first introduced in the U.S. by Progressive Insurance Company in 1998.  Progressive's program, called Snapshot, is what's known as usage-based insurance.  It personalizes your car insurance premium rate based on the way you actually use your vehicle.  You pay according to the data collected by your tracker, which is sent to your insurer and analyzed to determine your driving habits.

Many auto insurance companies offer usage-based programs.  Most provide an immediate discount to your policy cost simply for signing up to participate in the program.  You then get a personalized premium rate at renewal time, depending on the results of the analysis of your driving habits.  While there's the potential that your premium rate may increase if it's found that your driving behavior shows increased risk, most drivers experience lower policy costs at renewal time.

What Data is Tracked?

There are two ways for data to be tracked: one is with a dongle that plugs into your car's computer via the OBD-II port and the other is through an app loaded onto your smartphone.  Once collected, the data is sent wirelessly to your insurance company for analysis.

Insurers are interested in information that indicates your typical driving habits, particularly those that show risk of potential claims.  Data collected by the tracker system may include:

• Hard acceleration
• Hard braking
• Speeds driven
• Fast cornering
• Use of handheld device while driving
• How often you drive, for how long and what time of day