Payroll Services insurance – cost and types of policies

Whenever you budget the expenses of your business, Payroll Services insurance must be included in the list because you can’t always know exactly what can happen in the future.

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With the protection provided by insurance against accidents and all the other kinds of insurance we will tell you about, you can protect your business and yourself in case something unexpected happens.

Like any business owner, for your Payroll Services enterprise, you must consider how much financial risk you are taking on.

If your Payroll Services business runs without proper insurance, you are taking a tremendous chance not just of losing some money but of a complete wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the upshots of their actions. 

Payroll Services Insurance

In this article, we are giving very general guidelines for growing businesses to highlight what the main kinds of insurance that you need are, and where we can, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your Payroll Services business?

What this means, for any Payroll Services business owner, is that if some customer claims that your business caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your Payroll Services business is not sheltered by laws in the same way as states are, where laws can place a “cap” on the maximum level of liability.

In some states, like Montana, there are specific monetary levels that limit the amount an adjudicator can award in any case against the state.

In a court case, it’s purely the duty of the jury to award whatever amount they deem appropriate, even sometimes giving a person more than they have sued for.

When you are running your Payroll Services operations, you can’t avoid responsibility for the results of your actions.

Even more importantly, unless you have spent in advance the money necessary to have your business running as a limited liability company, all of that liability belongs to you alone.

What does Payroll Services insurance protect you from?

For your Payroll Services business, the most important types of insurance are designed to cover the risks to your business from accidents, from unexpected events, and from mistakes.

As well there are some mandatory kinds of insurance that various states require.

In the next few paragraphs, we will outline the most important points any Payroll Services business owner should consider when negotiating the insurance needed.

The main types of insurance for your Payroll Services businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any Payroll Services business is dealing directly with members of the public, and that means you always have the danger that some accident can happen to them themselves or else something of theirs can be damaged.

In such a case, they can sue you for compensation.

General liability insurance policy for your Payroll Services business insures you against claims coming from injury to visitors or damage to their property.

It protects your Payroll Services business from the claims themselves and as well to any associated court costs and legal fees of the lawsuits.

In many cases, it should help you to qualify for extra business from city and state organizations, where contracts insist on proper liability insurance.

The average level of general liability insurance for your Payroll Services business would be with a cap of $1 million for a single event and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your Payroll Services insurance operations.

Professional liability insurance for your Payroll Services business

In the event where a client alleges some negligence, errors, or omissions in how you conducted your Payroll Services business for them, you can quickly have to fight a law suit.

Even if the matter against you is judged in your favor, the cost of defense can be high, and the impact on your reputation can be damaging.

Every small Payroll Services business should have enough professional liability insurance to cover a single claim of $25,000, with annual cover of $50,000.

See the table in the cost of Payroll Services insurance section below for average prices of professional liability insurance for your Payroll Services operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that customers may claim that the results didn’t meet your description of function, or that your guidance was basically incorrect.

You need to know the explicit laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held culpable for injuries caused by products claimed to be defective.

To cover yourself against any likely lawsuit, you need Product liability insurance for Payroll Services

Only you can know exactly how much insurance you should get.

Best advice is to consult with experienced insurance agents, brokers or company representatives for guidance.

Commercial insurance

Commercial vehicle insurance for your Payroll Services business

Take care! – practically all policies for private vehicle insurance do not cover any event like theft or accidental damage when the car is being used for business purposes.

The right way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a direct commercial vehicle insurance package.

Commercial van policies cover the value of any vehicle in case of accident, malicious damage, fire, or theft.

Also, in case of any accident, the van itself, the content and any legal bills, medical expenses, and property damage is covered if your truck is involved in a collision.

Most states, other than Virginia and New Hampshire, mandate this type of insurance.

The required value of the insurance is worked-out for the depreciated value of the vehicle, and your intended level of cover of contents. 

Tools and Equipment insurance

Since your Payroll Services business needs specific and expensive equipment, you know how much it can cost to replace it in case of any damage, loss, or theft.

The gear may be subject to malicious damage, deliberate fire, theft, other such unexpected acts.

As well, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can eliminate your whole business in one stroke.

Unless you can afford to immediately replace such specific gear quickly out of your own pocket, you should have full-level equipment insurance so that you can immediately buy any equipment needed to keep your Payroll Services business running.

It is impossible to advise how much equipment insurance you need – it’s essentially dependent on how much you have invested in your Payroll Services business’ equipment.

Commercial Property insurance

Any Payroll Services business that owns or rents space in a building needs a commercial property insurance policy.

If you own the property, you probably have a substantial capital investment, in addition to a big liability if there’s a mortgage.

Every physical building location must carry insurance coverage for the value of the premises and contents against accidental occurrences like fire and storms, and against deliberate damages like theft and vandalism.

If your Payroll Services business deals in areas of high risk, like California or Georgia, additional coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Rhode Island, where unlimited cold snaps can cause damage to outer coverings of Payroll Services business premises, there is a need for more additional cover than in warmer climes.

Whereas the level of cover depends mainly on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of Payroll Services insurance section below to give some idea of the average prices per million dollars of property insurance for your Payroll Services business.

Temporary insurance by month, week or day for your Payroll Services business

Is your Payroll Services business working part-time or casually, or is the level of business variable?

Using short-term insurance makes good sense. Business insurance by the month, day, or week – temporary insurance for Payroll Services – are special policies where you can cover a nominated period when you want to be covered.

By only paying for that period of cover, you will save by having lower premiums but still having identical risk cover.

The essential feature of short-term insurance is that you buy the cover for a defined period – a specific date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of higher business activity, get the existing cover improved.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your Payroll Services business

You have the chance to combine several of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP merges commercial property and public liability insurance by incorporating these coverages into one insurance policy, which can save you money.

BOP insurance will shield you if any claims of injury or property damage are made.

It is often the right choice for small and medium-sized Payroll Services businesses, such as yours.

There are a few limits that will rule whether BOP is suitable for your own business.

BOPs cannot cover your professional liability or commercial vehicle cover.

Also, the size of your business will determine whether you are permitted to take out BOP cover.

The normal business that can take out a BOP policy must have no more than one hundred employees, and not more than five million dollars in annual revenue.

Plus, you must separately take out the necessary worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your Payroll Services business employees

In most states, it is mandatory to have workers compensation insurance when your Payroll Services business has one or more employees.

Workers compensation insurance covers the operation against any costs that arise if a worker experiences an injury or becomes sick as a result of work.

The benefits cover medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s regulations in this regard can leave you as the employer required to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only permit coverage from the government-run monopoly state funds.

In these states, you may not obtain your workers compensation obligations from private insurance companies.

Workers compensation rates are computed based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must refer to the relevant authorities in your state.

Average costs of these types of insurance

Although every Payroll Services insurance level is unique, there are enough examples of average quotes from insurance companies for us to give appropriate guidelines, including what are the cheapest rates offered.

Of course, you should always check with an agent what’s relevant for your business.

The list below is of annual premiums we have collected for the main types of insurance your Payroll Services businesses needs.

Types of insurance Price range
Public liability insurance $255 – $504
Product liability insurance $330 – $781
Equipment insurance $339 – $1371
Commercial vehicle insurance $1790 – $3104
General liability insurance $593 – $1151
Commercial insurance $1043 – $2702

Cost of insurance for your Payroll Services operations depends on many different factors.

We have estimated these figures for small freelance Payroll Services businesses.

In larger states like New York, premiums are generally about 20%-30% higher than national averages, but in smaller states like New Mexico, they can be about 20%-30% cheaper.

The location and size and type of your Payroll Services business can have a big effect on the cost of different policies.

You should consult with professional insurance agents and brokers, or insurance company representatives.

Also you can let the internet do the work for you by looking for insurance companies near where your business is located.

Another reliable source of information is the local Better Business Bureau in your town.

FAQ

What is small business insurance for Payroll Services operations?

This is an umbrella term used to describe standard insurance policies designed to protect Payroll Services business owners from risks like bodily injury, property damage, claims of negligence.

Does my Payroll Services business have to have insurance?

Some of the kinds of insurance are not mandatory for you to operate your business, but they can protect you from risks in your business operations.

Certain other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small Payroll Services business insurance policy cover?

Liability insurance provides protection against lawsuits or claims filed by a customer for bodily injury, property damage, or negligence.

The specific cover will vary based on your own operations.

See the table in the costing section above for average prices of the recommended policies for Payroll Services insurance.

How much will Payroll Services business insurance cost?

As well as the size of the business, some other factors, such as location and claims history, are used to determine your policy’s cost.

You should consult with professional insurance agents and brokers, or insurance company representatives.

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