Insurance

Insurance for Businesses

All businesses need insurance, but how much and what type depends on your business activities. Many types of insurance are available; some are required by law and others are optional. Unless otherwise noted, most insurance can be obtained from an insurance agency specializing in business insurance.

For information about a specific type of insurance, choose from the following:

Required Insurance

Businesses with one or more full time, part-time or seasonal employees must have workers compensation and unemployment insurance (actually a tax).

All businesses having one or more full time, part-time or seasonal employees must carry worker’s compensation insurance, administered by the Idaho Industrial Commission unless specifically exempt. Workers comp insurance can be obtained in four ways:

Exemptions: A few types of employment are exempt from Workers Compensation coverage. See Workers Compensation Exemptions. If your employees are exempt from coverage, each of them will need to file a declaration of exemption with the Idaho Industrial Commission.

Notification of Coverage: Employers need to display a poster provided by their insurance company indicating the business has workers comp insurance.

Out-of-state employers: Out-of-state employers having employees working in Idaho for up to 6 months can secure an “extraterritorial certificate of coverage” from their insurance provider. Out-of-state employers having an employee who lives and works in Idaho more than 6 months must carry workers comp insurance issued by a company approved to write insurance policies in Idaho. This includes employees who telecommute from their homes full time, part time, seasonally and occasionally. Contact your nearest Industrial Commission office for details.

Employers can reach the general Compliance division of the Industrial Commission by calling 208-334-6060 or emailing suretyrequest@iic.idaho.

Workers Comp Fraud: If you suspect an employee may be committing fraud, report the issue to your insurance company or the Idaho Industrial Commission.

Businesses having employees who live and work in Idaho (including out of state businesses) are required to pay unemployment insurance tax, a tax (not insurance) paid only by the employer. State unemployment taxes are administered by the Idaho Department of Labor. The Internal Revenue Service administers the federal unemployment tax. For information, visit the Taxes section of this website.

Close an account: If your business no longer has employees, please call 208-332-3576 to close your account.

Unemployment Fraud: If you suspect someone is fraudulently obtaining unemployment benefits, contact the Idaho Department of Labor.

Note: Corporation owners and officers who engage in the routine operations of the business must establish an unemployment Insurance tax account. They need to report a fair market wage before taking distributions or dividends that are not taxable as wages. Many new corporation owners do not realize that they are considered employees if they work in the business as if they were an employee. All corporations whose owners/officers provide services must open an unemployment insurance tax account with Idaho Department of Labor and either report wages or opt out as a corporate officer. For details, contact your nearest Department of Labor office.

Optional Insurance

You may need one or more of the following insurance products, depending on your specific business activity. Your insurance agent or professional association can provide information.

Bonds

A form of insurance guaranteeing that a business has the ability to complete the project for which it was hired. Also known as a performance bond, this is common in the construction industry. Contact your insurance agent for information. Businesses that are unable to obtain a bond through an insurance or surety company may qualify for the Small Business Administration’s (SBA) Surety Bond Guarantee Program. The SBA also guarantees contract bonds which ensure that the terms of a specific contract are fulfilled.

A type of insurance that protects employers against employee dishonesty, theft, fraud or embezzlement. Two types of bonds are available. A blanket bond covers all employees of a business, such as a bank or investment company. Specialty fidelity bonds cover specific individuals named in the bond. Your liability insurance, not a bond, should cover unintentional damage or breakage caused by an employee.

Third party fidelity bonds protect your clients from intentional theft or dishonesty on the part of your employees when working at the client’s business or home.

Businesses that regularly use independent contractors can purchase a fidelity bond to protect against intentional wrongful acts committed by independent contractors. Fidelity bonds are purchased from insurance companies.

Federal Bonding Program: At-risk job applicants who are not eligible for commercial bonding can be covered for up to six months through this program administered by the Idaho Department of Labor.

Commercial bonds ensure all applicable laws and regulations are followed. Government agencies require certain companies or individuals to obtain commercial bonds, which protect the general public against things like fraud. Contact your insurance agent for details.

Health

Companies having 50 or more employees are required by law to provide health insurance under the Employer Shared Responsibility provisions of the Affordable Care Act. To find a list of companies approved to sell health insurance plans to Idaho businesses and individuals, see Idaho Department of Insurance.

Dependent Children: If you have employees who pay court-ordered child support, you may be required to enroll their dependent children in your company’s health insurance program. For information, visit the Employer Issues section of this website and look for “Child Support Payroll Deductions.”

National Standard Insurance Reporting Number: If your business offers employee health insurance, you need to use a National Provider Identification Number for electronic claims reporting.

Idaho, unlike some states, does not offer a state-mandated disability insurance program other than the coverage offered by Worker’s Compensation and your company’s health insurance plan. Both short and long term disability insurance can be purchased from an insurance company. Short term covers the early stages of a disability and is appropriate for someone who is expected to make a full recovery. Long term disability insurance generally covers up to 5 years or until the person qualifies for either Medicare or Social Security disability payments. Disability insurance can be obtained from most insurance companies that offer health insurance.

Life Insurance

Providing life insurance is optional. It can be an individual policy on the business owner, a group policy that covers the owner and employees or one that covers only certain key employees.

Protects a business against financial loss caused by the death or disability of a key person, including the owner, partners, and/or members of the management team. Also used to fund buy/sell agreements when a business is owned by more than one person. The business owns the policy, pays the premiums, and is the beneficiary.

Miscellaneous

If you suspect an insurance company or agent may have committed fraud, you can file an online report with the National Association of Insurance Commissioners (NAIC) and with the Idaho Department of Insurance. If you suspect an employee or business owner has committed insurance fraud, contact the Idaho Department of Insurance.

Published by the Insurance Information Institute, this booklet covers basic insurance needs for small businesses, including Information on the needs of specific types of businesses, such as internet businesses, artists, food service, and farms and ranches.

Liability

Similar to individual automobile insurance, it covers business owned or leased vehicles (car, truck, van, or trailer). If a personal vehicle is used for business, special insurance coverage called “non-owned automobile coverage” may be needed. Contact your insurance agent for details.

Business liability insurance protects the financial interests of companies and business owners in the event they face lawsuits or third-party claims. Such policies cover any direct financial liabilities incurred, as well as any legal defense expenses.

Subcontractors and independent contractors can be required to have Owners and Contractors Protective Liability Coverage (OCP). This coverage protects either a property/business owner or a general contractor from possible liability arising from the negligent acts of an independent contractor or subcontractor hired to perform work on behalf of the business owner or general contractor.

Available to contractors; protects against natural disasters (water, wind, hail, fire, etc.) that damage or destroy a building while under construction.

Protects against financial loss when business activities are interrupted by a natural disaster. It supplements property/casualty coverage and can be added to a property insurance policy. It is not sold separately.

Businesses that collect, store, or handle customers’, patients’ and/or employees’ confidential, personal, or financial data, may need this insurance. It covers the costs of notifying victims of theft, fees associated with recovery of the data, legal expenses, and more.

Covers theft by employees, competitors, and others, including intellectual property theft. This may be needed in addition to property insurance, which covers the theft of physical property.

Completed operations insurance covers a contractor or manufacturer’s liability for property damage or injuries to a third party caused by faulty work in the construction or manufacture of a product. Construction products and the manufacturers of consumer goods and medicines should carry completed operations insurance as part of their liability policy.

Similar to personal renter’s insurance, covers damage, loss, or theft of the contents of a leased or rented building. The building owner should carry property insurance on the building (be sure to ask). The insurance may also cover leased equipment and items temporarily located at a job site.

Protects officers and directors of a corporation or non-profit organization from personal liability for their actions on behalf of the business.

Protects against wrongful termination, discrimination, harassment and other employment-related lawsuits filed by employees, former employees and potential employees.

Protects small businesses who export against non-payment and political risks that may affect payment. Issued by Export-Import Bank of the United States.

Protects the business if someone is injured while on the premises or employees damage the property of a customer while at a job location.

Home-based businesses may need additional coverage beyond that offered by a homeowner’s policy. Not all home-based business activities are covered by homeowners’ insurance, particularly if the actual activity, such as house painting, does not occur at the home. Check with your insurance agent for details.

Similar to completed operations insurance, it protects against lawsuits alleging injury or property loss due to a defect, design flaw or malfunction of a product, food, medication or another item.

Also known as Errors and Omissions insurance, it protects professionals who have greater than average knowledge in a particular area, such as CPAs, doctors, lawyers, engineers, architects and counselors, against lawsuits related to their professional expertise. Medical malpractice insurance is a type of professional liability insurance.

Property insurance protects a business’s buildings, property and inventory against physical loss or damage due to theft, fire, water, accident and more. “Floater” coverage insures property not located at the business, such as equipment or supplies stored at a job site.

Provides additional liability coverage beyond that offered by a primary liability policy. This may be needed by businesses engaged in high-risk activities.

This site is brought to you by the combined efforts of more than 20 state and federal agencies known as the RIB (Reducing Idaho’s Bureaucracy) Committee. Website development and updates were funded by grants from USDA Rural Development.

The Idaho Small Business Development Center maintains the site. Contact the Idaho SBDC today for a free business consultation.