Family-owned businesses are the foundation of the U.S. economy and make up a large portion of small businesses in Hawaiʻi. Like all businesses, owning and operating a family business offers both risks and rewards.
One such risk deals with insurance coverage. Not having the right small business insurance could lead to damaging financial losses, reputational harm, and potential legal compliance issues.
Let’s take a closer look at the insurance requirements that are relevant for Hawaiʻi’s family-owned businesses.
Small Business Health Insurance
This insurance coverage is one of the most sought after by employees, and one of the most difficult to navigate. In Hawaiʻi, small business owners are required to provide health care insurance coverage if they have one or more employees, regardless of their part-time or full-time status. However, there are some exceptions.
Groups excluded from health care coverage include employees who work fewer than 20 hours per week, real estate or insurance salespersons who are only paid via commission, agricultural seasonal workers, and individuals who work for family members (e.g. spouse, son, daughter), or children under the age of 21 who work for their father or mother.
Employers are required to pay at least 50% of the premium and employees can contribute no more than 1.5% of their wages. However, in Hawaiʻi, there are some tax credits available to small business owners that can help offset the cost of health insurance premiums if the employer has fewer than 25 full-time equivalent employees and pays an average wage that is less than $50,000 per year.
When choosing health insurance for a small business, there are four options to consider:
PPO
A preferred provider organization is the most common form of health insurance. This plan allows employees the freedom to choose both in-network and out-of-network hospitals and providers, although choosing an in-network provider typically results in a larger percentage of the claim being covered by the insurance company.
HMO
Health maintenance organization plans provide employees with health care services through a network of providers that have chosen to contract with the HMO. Employees with HMOs are required to choose a primary care provider who will provide the bulk of care but can also refer them to specialists as needed.
Indemnity Plan
An indemnity plan allows employees to take control of their own healthcare and choose the hospitals and providers they want. A set portion of the healthcare charges are paid by the insurance company and employees may need to pay for some services upfront and request reimbursement later.
HSA-Qualified Plan
An HSA-qualified plan is essentially a PPO plan that is used with a health savings account (HSA). The HSA functions as a bank account where employees can save their pre-tax dollars to specifically be used on medical expenses in the future.
Other Recommended Insurance Policies
Choosing an insurance package as a family-owned business can present challenges as there are often multiple generations involved in the decision-making process. However, it’s best not to prolong the process as not carrying the right insurance could negatively impact your premises, equipment, staff, and intellectual property.
Other insurance policies to consider carrying as a Hawaiʻi family-owned business include:
- General Liability Insurance – This will protect your small business from common claims, including property damage and third-party damage. It may also cover reputational harm, product liability claims, and advertising-related injuries.
- Professional Liability Insurance – Also known as errors and omissions (E&O) insurance, this coverage protects against financial losses resulting from errors, negligence, or malpractice. It is most commonly associated with businesses that provide services, such as lawyers, doctors, and financial advisors.
- Data Breach Insurance – Any family-owned small business that has any digital presence can benefit from carrying data breach insurance. This type of cyber liability coverage can protect companies in the event of a data breach or identity theft.
- Property Insurance – Small businesses that work out of a storefront, office, or any physical workspace should carry property insurance. This coverage protects against damage caused by theft, natural disasters, and more.
Business Insurance Policies Required in Hawaiʻi
Specific state laws can influence the types of insurance policies that small business owners must purchase. In Hawaiʻi, there are just two main types of business insurance that certain family-owned businesses must carry for compliance, including:
Commercial Auto Insurance
Any small business that uses a vehicle for work purposes, such as to deliver products or transfer goods, must have commercial auto insurance. This policy helps cover the costs of any work-related vehicle accidents.
Workers’ Compensation Insurance
While there are some exceptions, most employers in Hawaiʻi are required to carry workers’ compensation insurance if they have one or more employees, either part-time or full-time. This policy covers medical treatment for work-related illnesses and injuries, as well as potential disability benefits.
Let Atlas Provide the Business Insurance You Need
Understanding business insurance, where to get it, and how much to get can be overwhelming. Trust your small business insurance needs to one of the oldest insurance providers in Hawaiʻi.
At Atlas Insurance, we provide a team of local insurance experts that will tailor coverage to the needs of your small business. Contact Atlas today at (808) 400-6634 to get started.