What are the requirements for business insurance in Kentucky?
Business insurance requirements in Kentucky vary by industry. If you are hiring employees, or if your company is contracting with another business, you may also be required to carry certain types of coverage.
Workers’ compensation is required by the state if you employ three or more employees, including part-time and seasonal workers. This type of insurance covers medical treatments, lost wages, rehabilitation costs, and other expenses incurred by employees who are injured on the job. Employers are also protected from liability for workplace injuries and illnesses.
Kentucky does not require businesses to have general liability insurance. However, it is a good idea to purchase this type of policy to protect your company from claims made against it by customers or vendors on your property. General liability coverage can help you pay legal expenses and cover settlements.
What are the types of business insurance in Kentucky?
Here is a quick overview of the most common types of business insurance policies — and what they protect against:
General liability insurance.
General liability insurance protects your business from another person or business’s claims of bodily injury, associated medical costs, and damage to property. For example, if a customer slips and falls in your store, this policy would cover their medical bills and any resulting lawsuit against you for those injuries. However, there are some exclusions that apply broadly to most general liability policies:
- Intentional Acts
- Professional Liability
- Damage to Your Own Property
- Employee Benefits: If you pay out worker’s compensation or disability benefits, they will not be covered under a general liability policy.
Professional liability insurance.
Also known as errors and omissions (E&O) insurance, professional liability covers negligence claims made against professionals such as doctors, lawyers, or consultants.
Professional liability insurance policies typically exclude certain exposures. If a claim is filed against you, check with your insurance company to determine if the claim is covered. Some of the common exclusions include:
- Bodily injury or property damage
- Discrimination
- Criminal acts
- Identity theft
- False advertising, libel, and slander
- Copyright infringement or infringement on any patent, trademark, trade secret, copyright, or other intellectual property rights
Property insurance.
Property insurance covers the physical location of your business and your equipment against many events, such as fire or theft. Do you know what events or incidents are excluded from your property liability policy? Here’s a list of some common exclusions.
- Contractual Liability
- Expected Wear and Tear
- War or Nuclear Risk
- Employee Dishonesty
- Fraudulent Acts by Partners or Employees
- Criminal Acts
- Earth Movement (i.e., settlement, erosion, landslides, mudslides)
Workers’ compensation insurance.
The workers’ compensation pays partial wages to employees who become ill or injured on the job and reimburses employers for legal fees if an employee sues them over illness or injury while at work. Workers’ compensation excludes:
- Injuries caused by a co-workers’ misconduct or horseplay.
- Injuries sustained during voluntary participation in off-the-job activities such as company softball games or retreats.
- The injuries suffered while traveling on an assignment unrelated to the job, such as while on a sales call.
- Injuries suffered while intoxicated or under the influence of drugs (whether legal, illegal, or prescription).
How much does business insurance cost in Kentucky?
The cost of business insurance can vary widely depending on your industry and the risk involved with running your operation and serving customers. Some factors that influence the cost of business insurance are listed below.
Industry.
Businesses operating in highly regulated industries, such as healthcare, may require more complex coverage than businesses in low-risk industries like retail stores. The industry you operate in will influence how much it costs to insure your company.
Size and location.
The size of a business often corresponds with its risk level — large companies generally have higher liability risks than smaller operations. Location is another factor that affects insurance costs; businesses located in areas prone to natural disasters or crime may pay slightly more for coverage than their counterparts located elsewhere.
Your Employees
Businesses with a greater number of employees usually pay more for workers’ compensation insurance, as these businesses are statistically more likely to experience work-related injuries or illnesses.
Deductible amount and premium payment frequency.
Your deductible is the portion of any covered loss you agree to pay out-of-pocket before the insurer makes a payout, so a lower deductible typically comes at a higher premium price, and vice versa.
How to choose the best business insurance in Kentucky
Here are some tips on how to choose the best business insurance:
- Know what coverage is available. You can get help from an agent who specializes in commercial insurance, or you can go online and find free quotes from multiple carriers. When comparing rates, make sure you understand what is covered by each policy and whether deductibles apply. The policy should include any equipment or other assets that are used for business purposes.
- Have a clear understanding of what kind of coverage each policy provides before making a decision. This will help protect your company from unexpected incidents such as theft or fire.
- Establish the risks: Different businesses will face different risks. Those risks can be determined by industry or by location. Determine what risks are most common for businesses like yours — and then consider which ones would be most devastating for your specific business.
- Make sure the insurer has a good reputation for paying claims quickly and fairly.
- Set financial limits: Set limits for how much you’re willing to pay out of pocket if something were to go wrong before your insurance kicks in. For example, if your liability policy covers $1 million per incident and you have a $500 deductible, you’ll have to spend half a million dollars out of pocket before the insurance company starts paying anything.