279 - Let's Talk Insurance

On today's episode of the podcast I'm discussing business insurance with my guest, Nicole Lucas. 

I just started working with Nicole on my own insurance and wanted to bring her on the podcast to chat about insurance as an essential layer of legal protection. 

Insurance is going to look different for every single business, even two different McDonald's locations. Insurance is necessary to protect you if you are sued. This is important for our business and our personal livelihood because if our business goes down, that's also our livelihood. 

I just opened my law firm a couple of months ago and already I have three different clients being threatened with lawsuits. A couple are justified in that they made minor mistakes and they should give the people who are threatening them $500 to $1,000, that's probably the monetary amount that they caused. The other one is totally bogus. But in all of the cases people are threatening $20,000 to $50,000 lawsuits so we turn it over to the insurance company. I can help you not panic and turn it over to your insurance. 

There are a lot of bogus claims and people threatening just to get a buck. I asked Nicole, when these happen how often are the insurance companies going to settle it to get rid of it versus fully fighting it. It depends on research by the insurance company. 

Let's take for example a bogus worker's comp claim. The insurance company is going to do the due diligence unless there is obvious evidence. This isn't just let me cut you a check and shut you up. This can go as far as hiring investigative services. And each line of insurance is different. Auto claims are more cut and dry than others like worker's compensation or copyright. 

Nicole's company started working out with printing companies and within the last five years has started doing it all from mental health to martial arts studios. Looking at a wedding photographer as an example, if you came to Nicole, she's going to ask you about your role with questions like: 

• What is it that you do? Are you the main photographer, second shooter, consultant, etc.?
• Do you have a brick and mortar walk-in? Do you work from home? 
• What kind of equipment, storage and backup do you have? 

For someone who is the primary photographer that has a home office, they're going to get general liability and a professional liability policy. they may even get to a point where they have advertising injury coverage which is an additional endorsement. When you bring in a second shooter, they need to have their own insurance and you need to keep a copy of that to cover yourself because your name is on the contract and you brought them in. 

When someone sends you their insurance policy, here's what to look for. (Also, make note they should be brining their own equipment otherwise they're an employee). They should have their own business policy with general, liability and advertising injury. Starting January 1 in California you have to carry worker's compensation. Most contractors are required to carry this on a job in case they are injured on a project. Even if you don't have employees you still need to have some kind of coverage in place that's going to protect the original person in charge on the contract, even if they can't make it and you need to bring in a sub. 

Be transparent with your insurance person so they can properly match you with the coverage you need. Ballpark, you could expect to spend $40 - 70/month on just one policy unless they have an astronomical amount of expensive wedding photography equipment. A lot of these policies are based on how active you are. Now that we also have worker's compensation, this price will be more. My worker's comp is $50/month to protect my employers and it varies by industry and liability. Most workers comp that Nicole works on is $5,000+. It depends on payroll, how many people, etc. 

If a photographer's SD card corrupts can fall under more than just general liability. When we do policies certain things re automatically added like products completed. Another endorsement could be advertising injury. Every business posting on social media should have advertising injury for example if you use someone else's photo in your post. Get educated and take time to talk to your insurance broker and have them break down what comes with your policy so you understand what is covered and what you need. 

Let's say someone reaches out and says you copied their idea or they're threatening to sue. The first thing to do is to call your insurance broker or insurance company. You can inquire without filing a claim. You need to ask questions. You don't file a claim until you've been served. Some insurance companies want to step in earlier than others depending on severity and what you have like a text threatening a lawsuit or an email. They have to look into it due to insurance fraud.

If people have insurance, then it's easier for me to draft up a potential settlement and if they don't go for it then we go to insurance. 

I just helped some clients with EDD audits. From Nicole's experience, insurance won't cover employee misclassification unless your insurance broker did it wrong on your behalf but most of the time, this won't be covered by your insurance. 

There are different tests for different areas of employment code.. For example, they might be an employee for the purpose of worker's comp but find to be a contractor for the purpose of payroll. Nicole says it will be difficult to get worker's comp for contractors before it's based on payroll so there needs to be a paper trail. It's important to keep up on your state's employment classifications as they can change year over year.

Get in Touch with Our Guest

 Nichole Lucas, TIA Commercial Insurance

Find Nicole on Instagram at @insurancebynichole