Professional Employer Organizations (PEO)
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Professional employer organizations (PEOs) have evolved dramatically over the years into a wide array of groups that offer staffing and human resources services to other businesses. While many PEOs resemble traditional staffing companies, others function like outsourced human resources departments.
In most cases, PEOs offer some type of human resources services, typically for small businesses that lack the resources to perform some of the tasks in-house. If you operate a PEO, you are likely to offer payroll services, employee benefits services, tax administration services, and other HR functions to your corporate clients.
Why Do I Need PEO Insurance?
The only common characteristics shared by PEOs are that they are complicated. Most PEOs ultimately enter into co-employment agreements with their clients.
Each party will have certain obligations to employees that they must fulfill, greatly impacting employer/employee relationships and playing a significant role in the types of risk that the PEO takes on.
It is these contract specifics that determine what kind of insurance a PEO needs in order to protect itself and individual employees from employment-related claims.
Most PEOs also need basic business insurance to protect against some fairly common perils. A variety of commercial insurance policies are available to protect you from the risks you face, including:
- Slips, falls, and other injuries at your office
- Fire, smoke, or weather events that cause property damage
- Lawsuits related to your professional services
- Cyber breaches
PEO Insurance Coverages
Insurance exists for the purpose of protecting persons and organizations from the adverse financial consequences of certain unpredictable events, regardless of the coverage line being considered. For general liability insurance, the unpredictable event that constitutes the subject of the insurance is a claim of legal liability arising out of a company’s operations, premises, products, and completed work.
Umbrella liability insurance and excess liability insurance are two forms of secondary coverage—that is, they both sit above one or more underlying liability policies and do not attach until the underlying policy’s limit of insurance has been exhausted.
The Commercial Auto policy will pay “sums” for which the insured is legally liable because of bodily injury or property damage to which the insurance applies. Therefore, while covered bodily injury or property damage is required to trigger coverage, recovery under the policy can actually go beyond these types of damages.
Employee Benefits Liability insurance provides coverage to an employer for errors or omissions in the employer’s administration of its employee benefit program.
The Employee Benefits Liability coverage would pay for the benefits that would have been payable under the health insurance plan but for the employer’s error.
Commercial property is the policy that an organization purchases to pay for damage to its own buildings and the personal property in them. A commercial property policy can also cover loss of income or increase in expenses that result from insured damage to buildings and their contents.
A business income coverage form is an extension of the commercial property type policy which funds a company’s loss of income due to a slowdown or temporary suspension of normal operations which stem from damage to its physical property. Coverage typically includes the loss of income but excludes ordinary operating expenses.
Crime and Fidelity Insurance protects the actual money you have in the operating account and reserve accounts. Crime and Fidelity Insurance protects the money from embezzling, check fraud, invoice padding or false invoices, computer fraud and wire fraud.
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