PEO insurance

clock September 29, 2022

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What is a PEO Insurance Policy?

If you’re a small business owner, you know that it can be hard to keep up with all of the insurance requirements. That’s why many business owners choose to hire a professional employer organization (PEO) to handle their employee benefits. But what exactly is a PEO? And how can your company take advantage of a PEO insurance plan?

Let’s dive into PEO and the types of insurance you can get.

What is PEO?

A PEO is an independent company that provides human resources and payroll services for businesses like yours. Some small businesses do everything themselves. Others find it more cost-effective—and less time-consuming—to outsource these administrative tasks. They use a third-party provider like a PEO. They are also known for treating workers fairly and advocating for better wages and conditions for workers. 

In the insurance world, PEO stands for Professional Employer Organization. A PEO is a hybrid of an employee leasing company and an insurance carrier. They do not provide insurance products directly. In fact they act as a middleman between independent contractors (such as you) and a traditional carrier.

In this way, they can offer reduced costs to their clients. This is because they utilize the economies of scale and purchasing power to negotiate lower rates from carriers. Individuals would not be able to obtain on their own without such advantages.

PEOs also can offer additional services. These include Health insurance, dental insurance, life insurance, employee assistance programs (EAPs), legal services, and training and development. Remember a PEO is very different from an ASO.

The Difference Between PEO and ASO

A PEO is an outsourced HR department that handles payroll, benefits, and other administrative tasks for its clients. They serve as an extension of the company’s HR department, but at a lower cost. A PEO can also help with recruiting, employee training and development, and compliance with employment laws.

An ASO is similar to a PEO in that it offers HR services to its clients; however, unlike a PEO, an ASO does not provide payroll or benefits administration services. Instead, they focus on recruitment and training programs.

PEO Plan Examples 

In the case of medical malpractice insurance coverage through a PEO plan, you’ll still have access to all the same coverage options available with regular policies. These include indemnity (traditional indemnity), health maintenance organization (HMO), point-of-service (POS), and preferred provider organization (PPO).

Your employer will select one of these types based on its needs. Most business owners choose indemnity. This is because it offers the broadest scope of coverage at a reasonable cost. At the same time still being flexible enough for most small businesses needs.

If your employer chooses HMO coverage, you’ll be required to use a network of providers as part of your plan. This means that if you go outside the network for medical services and incur costs above what was covered by insurance, those expenses will be borne by you.

If your employer chooses PPO coverage, it’s because it’s the most cost-effective option for many small businesses. A PPO plan allows you to choose any participating provider in your area without having to seek a referral; however, you’ll pay higher out-of-pocket costs than with indemnity plans.

History of PEOs

PEOs have existed for thousands of years even though they weren’t named as such. We’ve found evidence of them in ancient Chinese texts. They were used to help with labor and to make sure that the laborers had basic needs met while they were working. The earliest records show that they were used in the fields and on factory floors, where they helped workers get paid more fairly and ensured that their families could be taken care of while they worked.

The first recorded PEO was created in 1839 when a group of women started a PEO called the Lowell Female Labor Reform Association (LFLRA). They did this so that women could find work with better pay and conditions than those offered by other employers at the time. They also wanted to make sure their families would be taken care of while they were away from home working hard each day.

Today they are used to protect workers and companies who work across states with different legislation and regulations. 

What Kinds of Companies Use PEOs?

The most common type of company that uses a PEO is one with more than 10 employees and employees working in different states. A single PEO can provide you with HR services across all your offices and locations, as well as from any remote workers who are not on your payroll. Consider the pros and cons of a PEO.

Benefits of PEOs include:

  • Reduced paperwork, because they take care of it for you
  • Increased efficiency, because they handle administrative tasks like payroll taxes and benefits administration
  • Specialized expertise in human resources

They also provide legal compliance. This is because they are experts in their field and can help you with all your HR needs

reduced costs, because the PEO handles all your HR needs and you don’t have to hire an in-house HR team

reduced liability, because PEOs are liable for your employees’ actions and not you increased productivity, because they take care of the administrative tasks so you can focus on running your business

What Types of Insurance Are Required for PEOs?

In addition to a general liability policy, most PEOs will also want to obtain insurance for workers’ compensation, property and auto coverage.

Some PEOs may opt for umbrella policies as well. Many states require that an E&O policy be in place in conjunction with workers’ compensation and general liability coverage.

To be eligible for the E&O insurance, PEOs must meet specific criteria. The most common criterion is that the PEO must have a minimum level of revenue in order to qualify for coverage. In addition, most insurers require that the company provide a detailed description of what services it provides and how it operates.

PEOs who qualify for the E&O insurance also must be able to provide proof of liability coverage. In addition, they must have an established track record of providing these services.

Finally, PEOs must be able to demonstrate that they are financially stable enough to pay any claims that might arise.

How Much Does PEO Insurance Cost?

As a business owner, you have a lot on your plate. You need to focus on growing your company and providing for the employees who work for you. But if you’re like most business owners, insurance isn’t the first thing that springs to mind when thinking about risk management.

That’s why we’re here: to help make sure that you have the right coverage in place at all times. We’ll provide guidance and expertise so that when an accident or other unfortunate event happens, there’s no need to worry about how it will affect your finances or reputation as an employer.

We can help with coverage such as workers’ compensation benefits, general liability protection, and property damage coverage—and since PEO insurance is less expensive than self-insurance (a process where businesses take on the responsibility of maintaining their own policies), we may be able to save our clients money while also providing them with peace of mind

. We can also provide you with workers’ compensation insurance that covers medical bills and lost wages for employees who are injured on the job. This type of coverage is especially important because it protects your business from lawsuits involving injuries sustained by employees during their employment.

Should I Buy Work Comp and Other Coverages in a Bundle or Separately?

If your business is a small business, it may be more cost-effective to buy coverages in a bundle. This will save you money because the premiums are lower. If you have a large company, however, it is recommended that each coverage be purchased separately as this will likely result in lower premiums for each policy than purchasing them all together.

If you fall somewhere between these two categories—between small and large—it is important to consider what type of insurance plan works best. Start by talking with an agent. They can help determine which option would be most beneficial for your company’s specific situation.

One of the most important things to consider when purchasing insurance is that it will benefit your business. Think about more ways than just protecting against loss. It can also provide you with financial stability and peace of mind. By taking the time to ensure that you are properly covered, you will be able to avoid many headaches down the road.

How Can I Purchase PEO Insurance?

If you are interested in purchasing PEO insurance, the first step is to find an insurance broker. An insurance broker is an independent agent who works with multiple insurance companies and can help you find the right policy for your business.

They will also be able to explain what each policy covers and how much it costs so that you can make sure that it meets all of your needs as a small business owner.

It’s important that you choose an experienced broker who has experience working with small businesses like yours and understands the unique challenges facing this type of company. They should be able to answer any questions about how PEO insurance works or which policies would best fit your needs.

Shopping for Insurance 

Once you have found a broker, it’s time to start shopping for an insurance policy. The first step will be to find out what coverage is required by law in your state and then determine how much coverage you think you need for other aspects of your business.

For example, if one of your employees is injured on the job and files a lawsuit against your company, would it be enough simply to cover medical costs?  Or would they also need workers’ compensation for lost wages while they were recovering?

It’s important to look at all of your needs and determine how much coverage you need for each. Once you have that figured out, it will be time to start comparing prices from different companies. This way you can find the best price for your business’s specific needs.

You Don’t Need To Be a Big Company To Have an Insurance Broker

You don’t need to be a big company to have an insurance broker. In fact, you can use an insurance broker to help you find the right policy for your business and get a quote for your business insurance in minutes. You can get multiple quotes from different companies and compare them side-by-side, which makes it easy to pick the best policy at the lowest cost.

How do I choose the right insurance broker? When you’re looking for an insurance broker, there are a few things to keep in mind. First, make sure that they have experience working with businesses like yours.

They should be able to give you ideas about how your insurance can help you save money and protect your business. They should also be able to explain the different types of coverage available for different businesses and recommend a policy that fits your needs. Second, ask for referrals from friends, family members, or colleagues who have worked with an insurance broker before.

If you don’t have any connections, try searching for an insurance broker on Google and reading reviews. Finally, make sure that your insurance broker is working for you and not the insurance companies. They should help you find the cheapest policy that meets all of your needs instead of just recommending policies from their own company.

Is PEO Insurance a Good Idea?

We hope that this article has helped you to understand the basics of what PEO insurance is and how it works. If you have a medium to a big company with over 10 employees it can make a lot of sense to have things like payroll covered by a PEO insurance policy to cover you if anything goes wrong. 

If you have any questions or concerns about your current coverage, please contact us today for a free quote.

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