Mind the (knowledge) gap 

One of the problems with professional insurance—and insurance generally—is jargon. It’s everywhere. We don’t like it any more than you do. Shrouding valuable policy information in confusing language means that the people who need to understand their policy the most – like you, the policyholder – often understand the least.

This means confusion, misinterpretation, and a lack of awareness about your insurance policy. Can you say, really, that you know exactly what your policy covers? And what your obligations under your policy are? If finding out means having to consult a dictionary every ten seconds, then we’re guessing probably not.

Shedding some light

That’s why we love breaking it down and clearing up the messy jargon. It’s a dirty job, but someone’s got to do it!

Take professional liability insurance (also known as errors and omissions insurance). Among its many important features is the fact that it’s a claims-made policy, rather than a claims-occurring policy. Now, we know that neither of these terms mean a great deal to the average I’m-told-I’ve-got-to-have-it-but-don’t-know-why type of insurance buyer. Why would they? But to understand these words is to understand a fundamental part of your insurance coverage. Let’s explain.

What does claims-made mean?

For a claim of negligence against you to be covered, your professional liability insurance policy has to be active at two points:

• when you did the work and
• when you report the claim.

Professional liability insurance is concerned with work you’ve already done, as that’s where claims originate. It can take months—or even years—for mistakes and latent problems to surface.

Which brings us to the really important part: your coverage only exists for as long as you keep your policy active.

What does that mean? Well, let’s say you cancel your professional liability insurance as soon as you finish work on a contract. If there’s a claim against you, say, three months later, it won’t be covered – even if it relates to work you did when the policy was in place.

That’s an eyebrow raiser for sure, and a common misunderstanding.

It’s easy to assume that, because you bought and paid for insurance at the time you were working, that its coverage still applies when it’s cancelled.

That’s not the case.

If you want to make sure you’re covered, you need to keep your insurance policy active. This is often a tricky business, though – it could mean paying for professional liability coverage years after completing your work, after you’ve ceased trading, or after you’ve retired (although at a lower premium).

So there we go. Hopefully we’ve made things a little clearer. We haven’t covered everything here, and we still need to talk about associated concepts like retroactive cover and ‘occurrence ‘policies, but at least you can impress colleagues with your newfound insurance knowledge – and protect yourself in the process.

Accountants Need More Than Professional Liability Insurance

As an accountant, your clients trust you with their livelihoods: their money, their taxes, and their businesses. You know that, if something goes wrong, you have professional liability insurance to cover claims against you.

Professional Liability: The Cornerstone of an Accountant’s Policies

Professional liability insurance is, of course, the most important insurance policy you’ll purchase. Your clients trust you to do the right thing: calculate the right amount of taxes to pay, keep their finances in order, and make sure their money is going where it should. You do your best to make sure that trust is well-placed by double-checking the numbers and being meticulous. But errors happen to even the best of accountants. If one of your clients thinks that you’re costing them money by being careless, or if the books don’t balance, you need to be covered.

A professional liability insurance policy provides that kind of protection. Should an angry client accuse you of making a mistake, it will not only pay for the cost of your defense but also any damages that you may have to pay. Attorney fees alone can run into five figures, as you’ve seen from your clients’ costs, and having to pay it yourself can drain your savings.

You’re also covered if a claim arises from past work you’ve done for a client. Professional liability insurance also covers errors and omissions and claims and damages.

Perhaps the most important benefit, though, is peace of mind. You know how sometimes, when you know everything has to be perfect, you make a mistake anyway out of sheer nerves? Having a policy in place alleviates some of the worry that you’ll make a costly mistake and lets you focus on keeping your clients’ finances in order.

Cover Yourself in Other Ways

Insurance coverage doesn’t stop at professional liability insurance.

General liability insurance covers you if your clients visit your office or if you visit clients. It handles of personal and property damage claims, like a client tripping over a box in your office or if your client thinks you downloaded a virus to a computer you use in his office. The legal costs of these claims alone can run into the six figures, so having a general liability policy saves you from spending a lot of money on a defense.

Workers’ compensation insurance is a must if you have even just one employee. If that employee hurts himself or gets a repetitive stress injury like carpal tunnel, you’ll be liable. The only state that doesn’t require workers’ compensation insurance isTexas. Check with your state for what’s required.

There are a few other types of insurance to consider. If you have an office outside your home for meeting with clients, you’ll want property and contents insurance to protect your equipment and files. If you work from a home office, you’ll need to make sure the contents of your office are covered under your home or renter’s insurance policy. If you use your car for business, you’ll also need to make sure your auto insurance policy covers you, particularly if you use your car to transport clients.

Choosing insurance coverage isn’t something most people want to think about, but it’s something that can save you a lot of headaches later so that you can focus on your clients, not liabilities.

For example, coverage is provided for injuries caused to a client who trips and falls when visiting your business premises.

Why Buy General Liability Insurance?
In today’s litigious society, companies cannot be too protected against potential lawsuits. The costs of a single lawsuit can quickly balloon out of control.

Even fraudulent claims have a financial impact on your business – you still have to defend yourself even if the claim against you has no merit at all – and this will be expensive.

General liability insurance protects against damages arising out of claims of property damage, bodily injury, slander, and libel, and the medical expenses, defense costs and judgments awarded as a result of those claims.

This ensures that your business will not be forced to close its doors after enduring a lawsuit.

Choosing Coverage Amounts
Coverage levels are determined by the perceived risk to your business.

The higher the risk of damage occurring, or the higher the potential for expensive damage, the higher the coverage level you should select.  Construction companies operating large machinery potentially have a greater risk of causing damage than a software development firm.

However, both types of businesses need  general liability insurance.

Additionally, home-based businesses should not assume they do not need this coverage.   If you visit clients’ premises or have clients visit you, you need the coverage.

Business location also has a bearing on the level of coverage needed.  Some states have historically awarded larger settlements in liability claims.  If you operate in one of these states, a higher level is recommended.

When selecting a coverage level, be sure to consider how much money your company can afford to pay out in the event of a lost court case.  A $2 million policy may seem sufficient, but if your company is found liable to the tune of $2.5 million, your company is on the hook for $500,000.

The best insurance policy is the one your business never needs to use. Operating your business in a safe and ethical manner will reduce the possibility of damage claims arising.

However, not all risks can be perceived or prevented.

In the event that a lawsuit is filed against your business, a comprehensive general liability insurance policy will ensure the survival of your life’s work.

Here are 5 ways to woo new clients and infuse your business:

1. Give Something Away
Everyone, no matter their financial status, loves to get something for free. Giveaways don’t have to bankrupt you, though. Something as small and simple as a promotional calendar with your company name on it not only makes you seem thoughtful and generous, it also serves as a constant reminder that you exist.

2. Run a Special
Many small businesses and freelancers are afraid to run specials out of fear that they will have to give away a large part of their services for free. The truth is, unless it’s a “Buy One Get One” deal, you really aren’t going to lose that much money. Offering 10 percent off a new client’s first order is an excellent way to entice that person to try you out, which could lead to more, full price business in the future.

3. Get Involved
Social media offers a powerful platform on which you can market to new clients. Remember, however, that this outlet is meant to be a very soft selling platform. The idea is to get involved with your customers and make them feel that you truly care about their needs and interests. Do it well enough and they’ll pass your name along to others who could be in need of your services.

4. Direct Mail Campaigns
With online marketing on the rise, fewer and fewer companies are using direct mail marketing to generate new business. This is a good thing for you, however, because it virtually eliminates the competition on that plane. Your postcards or promotional flyers are more likely to get attention when they are the only ones in your desired client’s mailbox.

5. Stand Out From the Crowd
Nothing garners more attention like being unique. The trick is to be unique in a way that is still professional and in keeping with your business image. So while standing on a sidewalk dressed as a fountain pen to promote your freelance writing business may grab attention, it probably won’t be the kind of attention you need to convince anyone to hire you. On the other hand, sending out a list of your writing services and rates along with a complimentary fountain pen for the client’s use will definitely make the kind of impression that you want to give.

Even if you use every one of these ideas to woo new clients, it is important to note that your efforts will be wasted if you aren’t targeting the right kinds of clients. Your marketing budget is most likely limited, so it is important that you make every single penny count. Take some time to establish your goals. Don’t just say, “I need to get new clients.” Define what type of clients you would like to gain and then be sure that the techniques you use cater to that specific niche.

Finally, know what you’re going to do once you get your foot in the door. It is easier to push a client away than it is to seal the deal. Be courteous, thoughtful, and respectful. Take the time to answer questions and leave the client confident that you are the right person for the job.

Have a happy Valentine’s day!

An insurance broker works for you, not a company

An insurance broker is an independent agent, who works for you and not any particular insurance company.  A broker’s job is to look at your small business situation and help you figure out what sort of insurance would work best for you.  Because a broker is not tied to any particular insurance company, they can help you find the best type of policy for your individual situation.

An insurance broker helps you sort through options

There are many types of small business insurance to consider, for example:

• Professional liability insurance
• Property liability insurance
• General liability insurance
• Employment practices liability insurance
• Workers compensation insurance
• Business interruption Insurance
• Disability insurance
• Life insurance
• Health insurance
• Vehicle insurance

Of course not every small business needs all types of insurance.  However, the financial stability of your company may depend on you getting enough of the right kind of insurance for your type of business.  Sorting through the different sorts of policies from different companies is difficult and complicated.

A small business insurance broker is familiar with many different policies from different companies.  They are also familiar with what kinds of insurance different types of businesses need.  An insurance broker can explain the purposes of different types of insurance and help you decide what insurance you need for your small business.

A small business insurance broker is an expert

As a small business owner, you are used to doing things on your own, but some tasks are better left to an expert.  Just as you hire an attorney to do legal work, and an accountant to take care of your finances, an insurance broker is an expert at handling your insurance needs.

The purpose of insurance is to transfer risk to keep your business financially secure. So you need to make sure you get the right type of insurance for your business, and the best possible policy at the best possible rate. An independent insurance broker who has experience in small business insurance is in the best position to help you sort through your insurance options to get the policies you need.

An insurance broker can get you the best policy at the best price

Different insurance companies offer similar types of policies, but all policies are not the same.  An insurance broker can help you evaluate which policy offers you the best protection for your particular business.  They can also help you avoid choosing a policy which might involve you taking on risks you want to avoid.  Moreover, an insurance broker can help you in the application process, so that your application for insurance goes more easily and so that you know what sort of information you need to provide in order to get the best possible rating from the insurance underwriters.  That will help you not only get the best small business insurance, but also to get insurance at the best price.

The bottom line

If you want to protect your business and provide for the insurance needs of yourself and you employees, a small business insurance broker will help you do that more efficiently, effectively and economically.

#1 – What is professional liability insurance?

Whether you work out of a home office, or have many employees, professional liability insurance is the most important type of insurance a small business owner should purchase.  Also referred to as errors and omissions Insurance, it protects your business from being sued as a result of your inability to provide services, whether or not you have actually done this.

#2 – Why purchase professional liability insurance?

Any small business that meets the following criteria, should consider purchasing professional liability insurance:

Ø  Does your small business provide a professional service?

Ø  Do your offer advice to clients on a regular basis?

Ø  Has a client requested that you have professional liability insurance to meet their needs?

#3 – What does professional liability insurance cover?

Professional liability insurance policies vary.  However, many of them cover not only your business, but you as an individual.  It is important to discuss with your insurance agent what specifically is covered in your policy.

#4 – What should the policy offer me?

It is important to make sure there are a few details included in your professional liability insurance policy, including:

Ø  Legal defense costs – It is important that you choose a professional liability policy that does include the cost of a lawyer, judgments against you and court costs.

Ø  W2 and subcontracted employees – In the event you use temporary employees, or subcontract your work out, it is important that your policy covers these types of situations.  In addition, it is important that you ask your sub-contractors if they have professional liability insurance, as yours may not cover them, or if they are sued separately from or alongside you.

Ø  Copyright infringement and intellectual property infringement –Even if you think you are taking the proper steps to avoid both copyright infringement and/or intellectual property infringement, it is important that you make sure your professional liability insurance policy covers you in case these situations arise.

Ø  Personal injury – Not everyone is going to like you and/or your company.  Having personal injury coverage under your professional liability policy can help protect, not only your company, but you from slander, invasion of privacy and libel.

Ø  Coverage worldwide – If any of your work is completed outside the U.S., you should make sure your policy covers this.

#5 – What else should I consider regarding professional liability insurance?

Aside from ensuring your policy covers the types of situations you may come across, here are a few more ideas about what you should consider when choosing professional liability insurance:

Ø  Customized coverage – You may not be concerned about having subcontracted employees covered, particularly if you do not use them. However, you may need worldwide coverage.  It is a good idea to look for coverage that is customized to meet the needs of your small business.

Ø  Flexible payments – A professional liability insurance policy may cost you a lot of money.  However, it may benefit you to find a company that offers a payment plan that suits your company.

While not all of your questions regarding professional liability insurance may have been answered, this will give you a head-start on ensuring you have what your small business needs.

Don’t let mistakes wreck your business

Even with diligent standards, controls, and processes in place, any professional is still human, and that means mistakes can be made. You don’t want to think you can miss a renewal or arrange the wrong policy, but it can happen. And if an error made by you, or by anyone working for your organization, negatively affects the client, you could be sued for damages. Even if a client believes you just didn’t do what you were supposed to do, they can file a claim against you.

Lawsuits against an insurance agent, even lawsuits without much credence, can have a devastating effect, particularly on relatively small independent agencies. Professional liability insurance minimizes this risk by covering claims arising from actual or alleged errors, omissions, and/or negligence.

Understand how you’re vulnerable

If a client says he has been wronged (whether it’s true or not), the effect on your firm can be substantial:

• Any compensation due to the injured claimant
• Legal fees
• Loss of productive labor time that’s instead used on meetings with defense lawyers, file reviews, and depositions
• Damage to your company’s reputation that devalues your brand
• Possible loss of accounts due to clients’ negative reactions to the claims against you
• Loss of key personnel who move to other companies, fearing instability at your firm.

If you suffer any of these consequences, professional liability insurance can protect your business financially, paying damages, covering legal fees, and compensating for loss.

You might be tempted to think you’ll never need professional liability insurance, or that you don’t need much of it, because you run a tight ship. But mistakes, after all, aren’t planned. They can happen, even in the best organizations and by the best people. And, unfortunately, not all lawsuits are because of a genuine mistake. Sometimes they’re brought unjustly, but they nonetheless can cause you significant harm.

Get the coverage you need

Keep in mind how exorbitant attorneys’ fees are, as well as how excessive damage compensation awards can be. Your policy should cover the worst-case scenario. Consult with your attorneys to determine how much coverage you need, but in most cases, the best decision is to buy as much coverage as you can afford. And as you grow, periodically review your coverage to ensure it still meets your protection needs.

Pay attention to details

When shopping for professional liability insurance, it’s important to consider:

• the amount of the deductible
• whether it’s “claims made” coverage (covering claims made during the coverage period) or “occurrence” coverage (covering events that happen during the coverage period)
• exemptions (e.g., punitive damages owed to professional licensing or governmental agencies)
• the reliability and reputation of the carrier, as well as the carrier’s familiarity with covering insurance agencies.

Discourage claims with good management

Of course, the goal is to never have a claim brought against you. You need professional liability insurance, just in case, but you can take steps to prevent ever having to use it. Identify areas of exposure and implement processes and training designed to prevent errors in those areas. Have a company culture in which client happiness is stressed. Install systems such as client complaint lines to address customer problems before they become large problems.

But in the end, you shouldn’t avoid professional liability insurance any more than your clients should avoid their vital insurance needs.

It’s that time of year, when we all vow to do in 2012 the things we didn’t manage to get done in 2011. Or 2010. Or 2009.

For a freelancer, year-end is an ideal time to look back and figure out what went right this year and what could have been done better. It’s time to take stock of your needs, say “Out the old!” and embrace the new. A New Year’s checklist makes it easy for you to get organized for next year .

Receivables

Now is the time to take an honest look at your old A/R balances. Are you carrying old account balances that you know at heart you’ll never collect? Maybe it’s time to give up on them. If the deadbeats pay you someday, great. If they don’t, at least you won’t have spent any more time or effort on trying to get blood from a proverbial turnip.

Promotional Gifts

By the same token, reward your best clients — you know, the ones who give you a lot of business and pay really fast. Use promotional gifts to tell them how much you appreciate them. We’re not talking about branded gadgets and trinkets. Show your clients some freelance love with a gift that sets up a win-win situation for both of you. How about a discount coupon for a new service you’re offering, or for one of your existing services that they haven’t tried yet? How about printing up a 2012 calendar of service specials, each good for just one month?

Disaster Prep

How much trouble would you be in if your computer didn’t boot up tomorrow morning? You don’t even want to think about it? That’s what we thought. There’s no excuse for not backing up your data when you can back up all your important files online.

The end of the year is also a good time to make sure your anti-virus and anti-malware programs are up to date.  Once you’re caught up, schedule weekly backups and software updates throughout the coming year. Trust InsuranceBee — you’ll sleep better!

While you’re at it, write down all the serial numbers and service telephone numbers for your computer equipment, TVs, appliances—anything worth repairing. You may need a flashlight and a magnifying glass to find them, but your effort will be well worth. You’ll thank yourself if you need to troubleshoot your wireless router but you can’t look your ISP’s phone number up on the internet because, well, your wireless router is out.

Taxes

It’s a good idea to look back on the old year with Uncle Sam in mind.  Don’t let the IRS put you in the penalty box for underpaying your taxes. You should be fine if you’ve paid at least 90 percent of the tax you paid last year. Check to be sure you have receipts for all of your business expenses and personal deductions.

Tax forms are already available online, so run a rough draft of your tax return before year-end. If you’re sitting on the edge of a tax bracket, it’s not too late to do some year-end planning to reduce your taxable income. Making a charitable donation, paying tax-deductible expenses, and buying new equipment are a few of the ways you may be able to reduce your taxable income before year-end. Consult your tax advisor to make sure your deductions are legitimate.

Insurance

And lastly, don’t forget your insurance.  As you’re in the mood to review and re-evaluate, it makes sense to look at the coverage you’ve got and make sure it’s enough to protect your business. If you’re looking to invest in more equipment, for example, make sure your policy covers it.

Or if you’re looking to add to the range of services you offer, have a look at your professional liability insurance policy wording and make sure they’ll be covered. If you’re in doubt, it’s best to talk it through with your insurance broker.

A little year-end housekeeping can help you stay focused and organized. Make 2012 a success by planning ahead and moving forward!

Most think of things like money, time, marketing, errors and omissions insurance, products, and more. However, when many people decide to become full-time freelancers, they often fail to think of a freelancing career like opening up their own business.

Money, Money, Money

Just as if you were going to start any kind of business, you need to have your finances in line. You should really save more money than you even need, since you’ll be responsible for things such as taxes including social security taxes that employers pay, healthcare, and retirement accounts. Remember all the office supplies you used that were used free of charge? Now you’ll be responsible for them, including costs like business licenses, money for marketing, events, and other things a company would either pay you for or reimburse you for, including gas mileage.  You’ll also want to have a safety net of money for times when work may slow down.

Self-Discipline

Just the way some aren’t opera singers, some aren’t cut out to work for themselves. There’s a saying that if you can’t work for someone else, you can’t work for yourself. Look back at how you’ve performed at certain jobs or other responsibilities: do you have a tendency to procrastinate? Are you easily distracted? Be honest with yourself and figure out if truly you have the discipline to make yourself work a certain number of hours. Try to find solutions early on for possible distractions.

Shooting For The Stars

Be honest with yourself about what the future could hold. Most freelancers either don’t aim high enough and come out with poor results or aim too high too fast and get discouraged. Create a timeline outlining your goals. Adjust it as time goes on when you see changes. You have to make goals for yourself so that you have the opportunity to exceed your own expectations and to achieve what you set out to do.

Location, Location, Location

Establish where you’re going to do work before going freelance.  A coffee shop? A home office? A library? Pick a place where you will feel comfortable,  free of distractions, and can work efficiently without interruption. Figure out if your home is the best place to work. If you have two toddlers and want to be a freelancer to ‘spend time with them,’ being a freelancer may not work. You’d either end up racked with guilt because you can’t spend the time with them you thought you’d be able to, or you’ll end up spending all your time with them and not getting any work done.

The Legal Aspects

If you’re going to be a freelancer, odds are you’re going to be doing something that produces unique work for a client, such as if you’re a writer, graphic designer, or website developer. Therefore, you need to know all the ins and outs of the laws governing your work. Make sure you understand copyright laws, business laws for the self-employed, laws that govern financial components, tax law, liability issues, and more.

And get covered too. Professional Liability insurance will help protect your business if a client sues you for a mistake you’ve made.

Preparing to be a freelancer is more than just having the skills and exercising them: it’s about who you are as a person. It’s also how you handle such a job and the things that come along with it. Even if you have the skills, but not the ability to follow through with them , then freelancing doesn’t make sense when you could use your skills as an employee. It takes a certain type of person to freelance; and if it’s not your personality, that’s okay too.

…which one are you?

In 2011, an online survey conducted by Right Management was taken by 430 senior HR professionals in order to find out more about employers using independent contractors.

Right Management reported that while many independent contractors eventually become full time employees, a good number of contractors continue to enjoy their independence. While it’s true that many enjoy the ‘independence’ of being an independent contractor, there’s still one question looming: should you be classified as an  contractor or an employee?

Due to the rise in the number of independent contractors being used by a large number of employers, the IRS and government have taken a keen interest in this slightly grey area. Whether the IRS sees a red flag from an independent contractor’s taxes or from the employer’s, the IRS is now focusing more on making sure that workers are being properly classified. There are a large number of people who thought they have been completing work as a true ‘independent contractor,’ when in fact, they should have been classified as an employee.

Sometimes a contractor doesn’t intentionally make the mistake of classifying themselves as an independent contractor if they should be an employee, and some companies don’t realize the true definitions of what it means to use an independent contractor.

However, the IRS has distinctly created a classification system that makes determining between one or the other very clear for both parties:

According to the IRS, there are essentially three main regulations determining which classification the worker belongs to. These are known as “Common Law Rules,” and basically consider an ‘employers’ control and the contractor’s or employee’s independence.

1.) Behavioral: The behavior factor attempts to answer this question: does the company that hired the contractor have any control or the rights to control what the worker does as far as the work completed? The IRS considers “freedom of action” a key point here: whether the person paying for a contractor’s work has a legal right to control all details of the work provided, including how much control the company paying has over how and when work will be completed. Most independent contractors are given a particular job to do and a timeframe to complete it in, and are not given ‘guidelines’ about the way they should work, as long as the work is completed using their own tools by the given deadline, or within the pre-determined time period.

2.) Financial: This factor asks whether the business basically has any control over the worker’s “business aspects,” such as the manner in which the worker is paid, if any expense reimbursements are made, and who supplies what is needed to get the job done. So essentially, if you’re a worker and if the person you’re completing work for has you log in at a certain time using a shared intranet on a computer they’ve provided for you, then you should probably be considered an employee, since they have supplied you with your ‘tools’ and have also set guidelines for you such as what time you’re to ‘report’ to work.

3.) Type of Relationship: This regulation seeks to find out if there were ever any contracts entered into and seeks to determine whether the employer pays for any benefits normally reserved for an official ‘employee’, such as insurance, pension plans, paid time off, or other benefits. Additionally, the nature of the relationship is considered: do the two parties plan for the relationship to continue indefinitely and is the contractor doing any work that’s considered a key component to the business as a whole? If some of these factors are true, the contractor should probably be classified as an employee.

If you’ve been working as an independent contractor and you’re still questioning your status or if you’re wondering for the first time what you should be classified as, the IRS also uses the following criteria to help determine classification status. Typically, if you meet one of the following, you’re considered self-employed:

-If you are a member of some kind of partnership that runs a business or trade.

-If you perform a trade or have a business and are a sole proprietor or independent contractor while performing these. (So basically if you have your own business.)

-If you’re completely in business for yourself and not working solely for ONE client/employer for an indefinite period of time.

If you’re still confused about your status, you should definitely figure out what you should be classified as, because eventually, either you or your ‘employer’ will do something that calls the classification into question, so it’s better to be prepared if this happens.