What types of insurance do business with employees need?

Insurance for businesses with employees

Businesses with employees have a different level of risk, and additional responsibilities, than sole proprietors. The two key types of business insurance coverage options for businesses with employees are employment practices liability insurance and workers’ compensation insurance.

Employment practices liability provides coverage for businesses accused of violating the civil or legal rights of an employee. This insurance pays for any judgment and legal defense costs, no matter the outcome.

Workers’ compensation insurance is necessary for businesses with a minimum of employees, from three to five, depending on the state the business operates in. This insurance pays for medical expenses and a portion of lost wages for any employee injured on the job.

Some businesses also purchase life insurance for key employees. Small businesses typically consider this type of coverage for employees or owners who are responsible for bringing in a large portion of clients or income, and without whom the business would have a difficult time operating.

Although not considered business insurance in the same vein as the other policies discussed here, health insurance is also something businesses are expected to make available for their employees. Purchasing this type of insurance typically requires a health insurance specialist and will depend on the size of the business, how many employees it has, and where the business is located.