Hiring new employees adds extra responsibility for a business, regardless of whether the business has 10 workers or 10,000. Hiring even a single new employee can impact the insurance requirements, liability assessment, and HR needs of the business by increasing insurance premiums or changing policy requirements.
Since a hiring decision can impact every aspect of the company, considering how to keep people and assets protected is important when onboarding new employees. Business insurance is not a one-size-fits-all solution for every situation, but rather, an adaptable plan based on the needs of the business.
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This article outlines how business owners can modify their insurance profile when hiring new employees to fill potential coverage gaps as their company grows in size. We’ll also highlight steps that business owners can take to improve their hiring process to make sure their insurance changes always fit their goals.
Why Do Businesses Need to Modify Their Business Insurance?
According to the 2023 Hiscox Underinsurance Report, 75% of small U.S. businesses lack sufficient insurance to protect their employees and avoid compliance risks. Additionally, in the same report, 83% of small business owners failed to correctly define a General Liability policy. This demonstrates a nationwide crisis of both insurance protection and insurance understanding that leaves small businesses vulnerable.
One of the core issues with how small businesses manage insurance risk today is the belief that policies can be set and forgotten for years without any changes. However, businesses can no longer use broad-based policy coverage to maintain eligibility and protection. As industries and regulations change and as the business grows, adds new workflows, and hires new talent, its insurance needs change.
What Should Employers Do? – Change is inevitable, but it isn’t impossible to predict. This simply warrants a constant effort from HR and business leaders to adapt the business insurance policies to match these new needs.
Types of Business Insurance to Modify
Hiring more employees changes the amount of insurance that business owners need, as well as the types of insurance their business will benefit from. These core insurance types should be on every business owner’s radar:
| Insurance Type | Description |
| Workers Compensation Insurance | Workers’ compensation insurance is required in Hawaiʻi to protect business owners from costs related to employee injuries, including medical expenses and wage losses. The higher the payroll of a business, the more Workers’ Compensation insurance they are usually required to have. |
| General Liability Insurance | General liability coverage is needed for businesses to cover the costs of property damage, third-party injuries, workplace hazards, and some legal liabilities. With more employees, business leaders should adjust their general liability coverage to reflect their increased risk. |
| Commercial Auto Insurance | With more employees driving company-owned vehicles or performing business-related activities in their own vehicles, business owners will need to update their commercial auto policies to make sure that all vehicles are sufficiently protected. |
| Employment Practices Liability Insurance | EPLI covers costs related to employee mistreatment, including harassment, discrimination, and wrongful termination. Hiring more employees expands the risk of employment practices liabilities, warranting expanded coverage to match. |
| Commercial Property Insurance | As operations expand and more employees operate machines, serve customers, and perform other business operations, the risk of commercial property damage increases, leading to a greater need for higher liability limits. |
Note – Other types of business insurance may warrant modification to meet the needs of growing operations, respond to natural disasters, and more. An experienced local insurance provider can help businesses modify their insurance strategy.
Insurance Steps to Improve the Employee Hiring Process
Hiring employees in Hawaiʻi involves much more than internal onboarding. Employers are responsible for maintaining regulatory compliance with several organizations, as well as changing their insurance strategy to account for the added risks and benefits of their growing operations.
These steps can help business leaders make the process go more smoothly:
New Employer Registration
For employers opening a new business and hiring their first employees, registration with the IRS is a significant first step in establishing an insurance identity in Hawaiʻi. Other significant offices include:
- The Hawaiʻi Department of Taxation
- The Hawaiʻi Department of Labor and Industrial Relations
- The Department of Labor
Registration with these offices will help businesses attain legal working status in Hawaiʻi as well as apply for workers’ compensation insurance.
Calculate Hiring Costs
There are many costs associated with hiring an employee, including training, benefits packages, and salaries. Additionally, insurance costs should be included in the calculations, including the cost of workers’ compensation, general liability, and more.
Display Required Notices
Hawaiʻi requires businesses to post certain labor laws, including federal labor law posters, to inform employees of their rights, which include disability compensation and unemployment insurance.
Reassess Insurance Needs
New hires change the insurance profile of both new and existing businesses. By adding new employees, businesses take on the responsibilities and risks of their workflows, vehicles, health and safety, and other legal liabilities.
For example, U.S. businesses pay an average of $47 per month for workers’ compensation insurance. However, this varies by the business size and location, insurance provider, and the risk level in their industry. Adding a new employee, especially if they add a new workflow to the business, can change monthly costs.
Other Necessary Practices
Outside of insurance updates, hiring new employees also requires employers to familiarize themselves with tax changes related to the size of their business, confirm Hawaiʻi labor laws, including minimum wage and overtime, report new hires to the Hawaiʻi Child Support Enforcement Agency, and file other hire documents. These include:
- Employment contract
- Form I-9
- Form W-4
- Form HW-4
These documents are required by Hawaiʻi and federal law for taxation, immigration enforcement, and other compliance practices. Local insurance brokers are a great resource to help businesses of any size adapt their insurance profiles to meet the needs of their growing workforce.
Experienced Insurance Brokers Help Adapt Business Insurance to Growing Needs
For over 95 years, Atlas Insurance has helped businesses in Hawaiʻi search all available insurance options to find the right balance of protection and value. Our commitment is to build strong client relationships with each business, taking a personalized approach to their insurance profiles and long-term goals. Our agents are dedicated to helping business owners better understand their insurance needs and options, especially as new hires and other changes impact their risk assessments.
Contact our team today to set up business insurance or review your plans to make sure you have comprehensive protection for your growing workforce.