There is another step that has to be done to make sure the company is ready to hire employees and operate with any kind of security. Every division, and every owner or stakeholder must carry worker’s compensation insurance.
Without this small step, a business is wide open to any manner of injury claims, for which the owners will be liable.
So what amounts to a clerical error or a “slip through the cracks” can end up costing your company thousands and thousands of dollars.
This could happen easily if the business owners don’t pay close attention to the number of policies, and the named insured’s on each.
I meet every year in January with clients to renew policies, but often the business has started a separate entity or maybe acquired a company. Business owners must remember to share these details.
What can go wrong is the process of communication. If divisions are created, the owners have to let their insurance holders know about the changes.
Every time a new division is established, business owners must be vigilant about having each entity properly insured and named with the principals or owners of the company – because if a serious injury or problem arises, the business could be out in the cold.
One big claim could open you and your business up to major liability. We in the insurance industry see it all the time.
There can be different laws and regulations as to who can be named on each policy. States require that the stakeholders have an insurable interest in the business in order to provide coverage.
– Steve Felker, President, GCG Risk Management Consultants LLC