Market Insight: Guest Articles
Tenant Insurance Update
by Jaffe-Schlossberg, Inc.
It is unclear at this time how the credit crunch will affect insurance rates, but with AIG holding some sub prime mortgage paper, it seems possible that the credit problems could extend into the insurance rating system. Regardless, there are certain specific coverages that should always be considered in an office setting where employees are involved.
It is critical that you ascertain the correct amount of liability coverage, with a $1,000,000 limit being the bare minimum. Predicated on the value and cash flow of the business, an umbrella of $1,000,000 to 5,000,000 should be added to the base liability coverage. This is particularly essential when the employees drive their own or business autos within the scope of business of the company. That exposure greatly increases the risk to the company of a larger lawsuit.
Another policy that is becoming more commonplace is the one that covers employer practice liability insurance. This protects the business from employment issues such as sexual harassment, wrongful dismissal, wrongful promotion, and other employment lawsuits such as ageism and sexism. This should always be coupled with directors and officers should the company structure be corporate.
With regard to the increasing concern about health insurance and the rising rate structure, there are interesting alternatives for group health coverage. A mix and match program pairing high deductible HSA’s for higher earning employees with a HMO or PPO program for the lower earning employees. Another major issue of the day is long term care which can be bought through the company either on an individual basis or a group one. The incredible advantage of utilizing the company for payment is that regardless of the structure of the company (Sole proprietor, Partnership, LLP, LLC, S Corporation or C Corporation) you can deduct some or all of the premium. In addition, you can purchase the policies on a fully discriminatory basis, that is, only the named employees can avail themselves of the coverage. That allows for a targeted program of benefits unlike any other insurance since the benefits are still tax free even though the premiums are deductible.
Lastly, all businesses should plan for their continuation should death or disability befall one of the owners. These problems can and should be handled with buyout life insurance and another possibility is buyout disability insurance.