Atascadero Auto Insurance Agent Reports Why Businesses Need to Insure Key Employees
`Any employee that drives a company vehicle as part of their job must be insured to protect the company and because it’s the law. Insuring key employees for several aspects of business, including auto insurance for driving company vehicles, is critical to business continuity and John Donovan Insurance Agent and his team in Atascadero work diligently to ensure key employees are well insured and the business well protected in the event of a key person loss.
A key employee is one who has a major ownership position, a major decision making role, or one who brings an invaluable skill that is critical to the success of the business. In short, a key employee is one whose death or incapacitation could leave the business at a serious financial loss.
Every business carries insurance to protect against the loss of assets such as real property, office and manufacturing equipment and vehicles. A key employee is an asset who contributes to the success of the business. It might seem cold and uncaring to look at someone as an asset, but doing so does not diminish that person. In fact, recognizing the critical role a key employee fills in a business is an honor to that person’s training, knowledge and skill. It is important to protect the business in the event that person dies or is incapacitated and no longer to able to contribute to the business’s products and financial future.
Along with workers compensation insurance, other business liability insurance such as driver and auto insurance for company vehicles a key employee drives and a benefits package that includes medical and dental insurance, it is in the company’s best interest to insure key employees for any business losses a death or incapacitation might cause.
- As an example, an engineer working for a manufacturing company has developed several products or manufacturing processes that have made the company a leader in its industry. Even though there is a team working with this engineer, if he or she is taken out of the picture, that loss is, at best, creating a slow-down in production and at the worst, production might come to a temporary halt.
- The loss of a partner who has a significant client base in a legal or marketing firm might cause some of those clients to take their business elsewhere. Even if clients stay with the firm, there may be a time lag while the new account executive gets up to speed.
- Certain kinds of contracts may require that key employees be insured as a guarantee that delivery of goods or services continue and that the client is protected.
When a key employee dies the business needs the financial resources to cover the expenses of finding, hiring and training a new employee, to continue the long range programs and projects that are compromised by the death and to assure creditors and customers that the business will continue.
The basic methods to evaluate a key employee and determine how much insurance is needed to:
- Estimate the cost of finding, hiring and training a replacement, including agency fees, moving expenses and the management team’s time for interviewing prospective replacements.
- Determine the amount of profit the key employee brings to the business and how many years it might take a new employee to reach that same level of performance.
Choosing the best way to insure key employees is only part of an entire business package. John Donovan and the team in Atascadero can help with auto insurance, liability, employee benefits, and key employee insurance coverage to protect your business.
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