Many business owners purchase insurance without truly understanding what they’re buying or what critical coverage they might be missing. Host Kirsten Howe addresses this knowledge gap by welcoming Dean Myers, owner of Core Insurance Agency, to reveal the fundamental insurance coverage every business owner needs before opening their doors. Dean, who specializes in errors and omissions insurance for lawyers, accountants, doctors, and professional trustees, breaks down the three critical pillars of business insurance: workers’ compensation, general liability, and property insurance.
As the first installment of a multi-part series, the focus centers on the absolute basics that form the foundation of any solid business insurance strategy. Dean demystifies workers’ compensation requirements in California, explaining why it’s legally mandatory even for part-time employees and how the no-fault system protects both employers and workers. The conversation explores the role of general liability insurance in protecting against third-party claims, encompassing a range of incidents, from slip-and-fall accidents to product liability issues. It explores the comprehensive coverage of property insurance, including business interruption and extra expense provisions. Whether you’re a solo practitioner considering your first employee or an established business owner reviewing your coverage, the discussion provides crucial insights into protecting your business from day one.
Time-stamped Show Notes:
0:00 Introduction
2:12 Meet Dean Myers, founder of Core Insurance Agency and specialist in professional liability coverage.
3:04 Listen in to learn about the three non-negotiable insurance pillars every business needs, plus why California law demands workers’ comp coverage even for your first part-time employee.
5:04 Workers’ comp is identical across all carriers by law, but the “no-fault” system means injured employees can never sue you.
7:06 Did you know? Injured workers typically receive only two-thirds of their salary because insurance companies aim to incentivize their return to work.
9:27 Office workers pay vastly different premiums than construction crews, and your claims history can earn you substantial discounts or painful penalties. Here’s what you need to know.
10:02 Pro Tip: Insurance companies often offer free risk management consultations that many businesses overlook, potentially missing out on significant premium savings.
14:20 Next, Kirsten and Dean discuss understanding the difference between premises coverage and products liability, which can help you avoid accidentally choosing the wrong protection.
15:51 Property insurance covers everything from meteor strikes to water damage, but the real goldmine is business interruption coverage.
17:31 Business interruption pays your lost revenue and employees’ salaries when disaster shuts you down, plus covers temporary facilities while you rebuild.
Get in touch with Dean!
Dean Myers
Core Insurance Agency
dmyers@thecoreagency.com
925-876-1303
https://www.thecoreagency.com/
Transcript:
Hello and welcome to Absolute Trust Talk. This is our video podcast here at Absolute Trust Council, and I’m Kirsten Howe. I’m the founder and managing attorney at Absolute Trust Council. Today, you are in luck. We’re going to be talking about insurance, which I know is not everybody’s most exciting favorite topic, but it’s very, very important. A lot of my clients, like me, are business owners. I wanted to do an episode or two about insurance that business owners should consider, or maybe even absolutely need to have, because I think many people don’t give it much thought. They just buy whatever somebody tells them they need to have, and they don’t really look at all the things they should have. They don’t even look at what they buy and understand it, nor do they understand their options and what they might be leaving on the table.
Today, we’re going to discuss insurance for business owners—not the kind of insurance that’s been in the news lately, such as property and casualty coverage, which we’re having trouble with in California due to the numerous natural disasters, or perhaps even the more unusual disasters like wildfires. That frustrating topic is not on our agenda. We’re here to discuss business insurance, and to break it down is my guest, Dean Myers.
Dean is the owner of Core Insurance Agency, which is an independently owned commercial insurance brokerage firm specializing in errors and omissions insurance for lawyers, accountants, doctors, and professional trustees. That’s their specialty. But they also place lines of coverage for these groups in all areas. They cover workers’ comp, general liability, property, employment practices, and something that we’re definitely going to talk about: cyber liability. Core was founded in 2011, and they’re here in Walnut Creek. Dean, welcome.
It’s a pleasure to be here, Kirsten. Thanks so much for having me.
You are most welcome. You know, I’ve been doing this podcast for a lot of years, and this is the first time I’ve had anyone talk on this topic, surprisingly. I think it’s very, very important, and in order to cover the things that I think people need to learn about, we’re going to do this in a few episodes. I want to break it down so the episodes are short and full of content. In our first episode, we’re going to talk about the basic insurance—how I look at it—that fundamental coverage every business owner needs to get before you even open the doors. So Dean, what would you say? What are the basic types of coverage that a business owner should be looking at?
The basic—you have to first start with workers’ comp in California, and in many states, but particularly in California, this is compulsory coverage. You have to have it. Even if you have one part-time employee, you’ve got to have it. That’s where you’d start with workers’ comp, and it’s a competitive marketplace, so depending upon the risk profile, you shouldn’t have any trouble getting workers’ comp coverage. There are a number of carriers, and it’s a very competitive marketplace.
From there, you’d go to general liability. You want to cover your third-party exposure, your third-party liability. If you’re making ice cream sandwiches and there’s a contaminated product, then some consumer of the ice cream sandwich gets sick because of your product, that’d be third-party coverage and product coverage. It also covers if I come to your office, Kirsten, trip and fall—you have premises coverage under general liability. I’m not an employee of yours; I’m a vendor, a third-party contractor. You need general liability. That’d be the next one.
And then from there, you’d need property insurance to cover your inventory, your equipment, your desk, your chairs, your computers, from theft, fire, and water damage. If you own the commercial building that you’re housed in, you need that as well. Those are the three pillars of coverage that you’ll need to start with.
Let’s focus on each one of those a little bit. You started with workers’ comp. So obviously, if you’re solo and you don’t have any employees, you’re not worried about that yet. It’s when you get that first employee that you are actually legally required to have it. That’s not optional, correct?
Yeah, and it’s no fault. It’s all the carriers—it’s the same coverage from carrier to carrier. The pricing will be different from carrier to carrier, but the coverage will be the exact same, since it’s compulsory coverage.
It’s specified by state law what you have to have, and they all cover the same exact stuff.
Exactly. They’ll cover funeral expenses—I mean, not to get too deep—they’ll cover long-term disability. It has a very broad coverage. It’s fraught with a little bit of fraud, and we can touch on that in a little bit, but for the most part, these carriers do a phenomenal job of making sure—what they want to do is get your worker back to work. They don’t want to turn it into a long-term care situation. Some injuries get into that—construction workers falling off a bridge or something—where you’re permanently disabled, you can’t go back to work. But you can be rehabbed into potentially finding employment in another industry or line of work.
Or a different job within the same company?
Great point, yeah. You’re speaking my language. That’s exactly right.
I do know that it’s not just about “oh, I was injured, give me some money.” It is really about helping get that employee what they need, whether that’s physical therapy or—one of my sons had a repetitive use injury, technically tennis elbow, but it wasn’t from playing tennis. It was from actually sitting at his desk and working too much. He got all kinds of stuff—he got an ergonomic specialist to come out and do all the things, he got physical therapy, he got acupuncture. And he’s gradually getting better, if anybody cares. But anyway, it’s amazing what that covers, and it’s understandable when you get what the purpose of it is.
And that’s the whole point. They have access to all kinds of facilities and trainers. The other aspect of workers’ comp is that they’re not going to cover your whole salary. It’s only going to be two-thirds because they want to give you an incentive to get that employee back to work.
Which is what you would get if you went on state disability. You’re not going to get your full salary. You get like two-thirds.
Exactly.
And the other thing about workers’ comp from the business owner’s perspective—what a great solution for us. You’re paying a premium, and your employee cannot sue you.
That’s exactly right. There are exceptions—in everything in life, particularly insurance. I know in legal too, there are third-party claims where, say, your employee gets injured, but because of the actions of another company or business, then your employee could go after that business, and that’s where the employer’s liability comes in. They’re rare claims, and they’re really hard to be successful with. But those are my worst claims, though—my nastiest, most expensive claims, because I do claims reviews as part of what we do. We want those claims closed. The longer the carrier has that claim file open, the more expensive it becomes, and then that will drive your premium up. So we want to get those claims resolved, files closed, and moved on. But third-party claims can last for years.
That’s like regular litigation, which takes a few years, whereas with workers’ comp, as you said, it’s no fault. It doesn’t matter what happened. I was on the job and I got injured—now I get coverage.
Yeah, that’s exactly right. And it’s a very, for the most part, pretty seamless process, depending upon the extent of the injury, of course.
And you mentioned if it goes on for too long, possibly your premiums can go up. I’m guessing the premiums are different depending on what your business is. My workers’ comp premium is probably pretty low relative to a trucking company’s workers’ comp. My employees sit at a desk. They don’t lift stuff, they’re not driving forklifts, and dangerous things.
Yeah, depending upon your risk profile. If you’re insuring employees who are operating heavy machinery, that’s a rating issue, and you’re going to be paying more for that because of the risk profile. Hopefully, you won’t have to invest too much in risk management. Hopefully, you don’t have any cords in your office that people can trip over. And manufacturing plants should—it’ll drive your premium down substantially if you just put in the effort: employee training, documentation, and allowing the insurance companies to come in and perform their own risk management, what we call engineering. It’s free. I don’t know why—most businesses don’t resist it, but it will save you a ton of money.
And you have experience modifications, so your experience mod—yours is going to be pretty low to begin with, as you said, you’re at the bottom of the rating structure. But experience modifications are an individual rating mechanism, so if you have claims, your experience mod is going to go up. That’s going to drive your premium up. And if you don’t have claims, your experience mod is a credit. It’s a premium credit. There are numerous incentives.
Got it. If you go for five years and no one’s ever made a claim, you might get a little discount.
Exactly. It depends—it’s relative. If you don’t have claims, but all of your other law firms are having claims, it’s relative to that as well. If no one’s having claims in your industry, then you’re probably only going to get a tiny credit. But if you’re the shining star, and all the other law firms are having claims, you’re going to get substantial credit because you’re going to be more desirable.
Okay. Then you talked about general liability, which I guess there’s probably not a legal requirement that you have it, but why wouldn’t you?
Well, right? Why wouldn’t you? And there might be contractual requirements for you to have it—your landlord, if you’re a contractor. I had this happen last night, where—if it’s a city, you’re redoing bathrooms at a venue, they’re going to have contractual requirements.
Now, general liability is super broad. It doesn’t cover everything, though. It wouldn’t cover, for example, the product recall that I mentioned earlier about the ice cream sandwich manufacturer. You can add on coverages, though, but the base coverage is premises operations, so it covers bodily injury and property damage. That’s the whole basis. It covers personal injury and advertising injury as well. But the twin pillars there are bodily injury and property damage, so you have premises operations, and then you have products completed operations.
So, depending upon your business, if you’re a manufacturer or if you’re a law firm, you obviously don’t have products, but you have premises exposure. You can get under general liability—you can get some contractual liability. If you’re a contractor, it doesn’t cover if you don’t show up to do the job. But if you do the job and you cause damage to a third party, let’s say you’re building a retaining wall. The retaining wall collapses into your neighbor’s pool. Well, that neighbor is not in contact with the contractor. The client is, and so then we’d be paying that homeowner who we don’t know X amount based on the completed operation or lack thereof.
Got it. So certain industries, you would be crazy to go into business—in good conscience, you can’t do it without it.
So that would cover damage or theft of my own equipment or inventory?
No—it doesn’t cover anything of your own possession. It would cover damages that are inflicted or experienced by a third party.
So that’s liability to outsiders. That protects the business owner from that.
Exactly. If you’re designing baby seats—I had a claim, this is a while ago—the baby seat belt came across the baby’s neck. If the baby wasn’t strapped in properly, it would choke the baby. Well, that’s a product’s exposure. It wouldn’t—if there’s damage to the product, it wouldn’t cover that. If it’s a faulty design, there’s other coverage for that, but the resulting damage is what we come in for with the general liability.
As a result of the product that you created.
Exactly. Got it.
So that’s general liability insurance, and we covered workers’ comp. And what was the third one? Property—that’s what I was getting at. That covers my—if a meteor hits my office and destroys all my computers.
Well, a meteor, that’s a good one. But yes, the resulting damage to your building, your equipment—yes, it would cover that.
Is there some carve-out for meteors?
Well, if you live near an airport, a plane crashes into you, that’d probably be covered. So, property coverage is first party. It covers your business—your inventory. And within property coverage, you have inland marine, so if you’re transporting your own goods on your vehicles, not through UPS or FedEx, but on your own—if you’re moving them in transit, so they’re not at your facility, then there would be coverage while they’re in transit.
Property coverage would include business interruption, which is so vital. If that meteor or airplane or something—a covered claim—shuts down your business for, say, six months, well, then you’re out of revenue for six months. The insurance is going to come in and say, “Okay, we’re going to make up for that lost revenue.” Also, if your business is damaged, you’re going to need a temporary facility to continue operations. Then we’ll have the extra expense component. There’s also business interruption and extra expense. Make sure you have those in tandem so you can continue operations, pay your employees, and generate revenue, and then, when your facilities are repaired, you move back into the original office.
And these insurance companies—they know exactly what they’re doing. They know the square footage. Rent in Richmond can be different than the square footage in San Francisco, so they’re very adaptable that way. They really can be an invaluable or very valuable partner for any business, particularly one with a manufacturing component, because they have so much more potential exposure.
It’s more difficult—if you couldn’t come to your office, I assume it would be much easier for you to take your laptop and just work remotely. Well, if you’ve got a manufacturing plant, if you’re roasting coffee beans, you’ve got to find a roaster, and you’ve got to find a facility that’s suitable for roasting and the exhaust and the fumes that are going to be generated. I mean, it’s kind of a dangerous endeavor, because you’re dealing with heat and instantaneous combustion. It’s not going to be easy to find that facility. You can’t just work from home. Your neighbors won’t be too happy when you do it in your garage.
So that’s where the carriers will come in. They know what they’re doing. They’ve been down this road many times. Most of my clients have never experienced a claim, or if they have, it’s only been one claim, so they really don’t know what to expect. You’re relying on the experts. The insurance companies want to do a good job for their clients, they really do, as do the brokers. And there are a lot of good ones in California, by the way.
I’m sure that’s true, and I think we’re talking to one right now.
Dean, thank you so much for all this wonderful information. As I said a little earlier in the episode, I think we’re going to do this in multiple episodes. You’ll want to stay tuned, because the best is yet to come. We’re going to talk about some really interesting types of insurance coverage in our next couple of episodes. Dean, thank you so much for being here.
Oh, I really enjoyed it. Thanks so much for having me.
We hope that you’ll check out our next couple of episodes. We’ll have Dean back. We’re going to cover E&O insurance, which is my favorite and least favorite, and cyber insurance, which I think is just fascinating. Thank you all for watching and listening, and we look forward to connecting with you next time.
Resources Related to This Episode:
- Absolute Trust Talk Ep. 89 Why Your Family Might Need Lifestyle Insurance and the Latest Opportunity Benefits https://absolutetrustcounsel.com/089-why-your-family-might-need-lifestyle-insurance-and-the-latest-opportunity-benefits/
- Absolute Trust Talk Ep. 52 Estate and Financial Planning with Life Insurance https://absolutetrustcounsel.com/052-estate-and-financial-planning-with-life-insurance/
- A Will is Not Enough – Securing Your Legacy with Estate Planning Life can change in an instant. A will is not enough to be prepared. Get free access to our actionable E-book Guidebook #1 and start protecting your legacy today. https://absolutetrustcounsel.com/guidebooks/
- Learn how to comfortably define gray areas and assess your unique needs to build a secure future now effortlessly. Check out Guidebook #2, Estate Planning Beyond the Basics, here > https://absolutetrustcounsel.com/guidebooks/
- Get our free introductory guide to the most used estate planning tool, family trusts, and understand how we plan to help protect your family. Guidebook #3: https://absolutetrustcounsel.com/guidebooks/
- Absolute Trust Counsel would love to offer access to our Incapacity Planning resource page: https://AbsoluteTrustCounsel.com/Incapacity-Planning/. We’ve collected our top planning information all in one place so listeners can find videos, guidebooks, blog posts, and a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
- We’re pleased to provide a library of e-books to address common estate planning questions and concerns in practical, easy-to-understand language. https://AbsoluteTrustCounsel.com/Resources/.
- ASK KIRSTEN: If you’d like Kirsten to answer your question on the air, please email her at Info@AbsoluteTrustCounsel.com.
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