Businesses change. If you’re expanding, changing your company structure or are chasing new goals, you should know how a business’s legal entity status affects your business insurance policy.
Changed Processes and New Policies
In general, changing your business’s legal status, entity-wise, can affect your insurance. For most types of insurance, a carrier will change their named insured based upon the customer’s request. Assuming a business hasn’t changed in scope of operation, it’s a pretty simple process.
If there are changes in the process, your provider will likely have to issue a new insurance policy. The ownership will stay the same, but the aspects of the policy will change. Your provider will then present insurance options which meet your business’ ever-growing needs. The insurance world usually thrives on a business’ success. Therefore, providers are often good about working to assist expanding entities.
So, if you’ve changed your business’s legal status — and if you’ve changed its operations — you’ll need to prepare yourself for a few policy shifts. Your employee base, operations and new responsibilities will drive these changes, so make sure you’re up to date on your business’s needs.
Workers Compensation Changes
In most cases, your provider will discuss your workers compensation policy coverage. Then, they’ll suggest changes. Because a business’ legal entity status relates to its workers— and their benefits—an existing workers compensation policy is the first to “go,” when a business assumes a new legal status. Then, the new workers compensation package takes its place.
Remember: Workers compensation costs are usually direct functions of a business’ payroll. If your payroll changes because your business has become a corporation, an LLC or a partnership, the policy will likely need to change.
As a business grows, it accrues new responsibilities. For this reason, insurance agencies commonly alter policy premiums and discounts. If your business has a higher amount of liabilities, it will have heftier business insurance needs. Likewise, if your business’ legal entity has changed to adopt new workers, a new property, a vehicle fleet or a number of assets, your policy will change.
Understandably, policy changes are very situational. In the business world, legal conflict happens. Employees get injured. Property needs change. While an insurance policy might not change directly because of a new legal entity status, the new status’ resulting changes can result in a number of policy changes. Make sure you’re always up to date on your business’ insurance options, and identify any possible discounts before considering a legal entity status change.
If you have any questions about your Fort Lauderdale business insurance options, give us a call at 954.771.0300.