Do you use your personal vehicle to earn extra money? For example, do you distribute newspapers home to home, deliver pizzas, or use your car as a taxi cab through Lyft or Uber?
Do you have a home office or otherwise operate a small business from your home? Maybe you are a freelance graphic designer. Perhaps you fix computers or perform minor handy work?
Do you sell items on eBay, Craigslist, or Etsy? Maybe you host Tupperware or handbag parties or do alterations for people?
Are you building a small business during the evenings and weekends with a hope to someday quit your day job and work full-time for yourself?
If you answered yes to any of the questions, you should be talking to your local insurance agent about your business exposures. Without the right coverage, you could be held personally responsible for the repairs, hospital bills, lost wages, and any damages awarded by the court. Does that surprise you? If so, you’re not alone. There are about 18 million home-based businesses in the United States. According to Independent Insurance Agents of America Inc., and only about 40 percent of them are adequately covered, if insured at all. That’s a lot of people who are trying to improve their lifestyle, but are unknowingly gambling with their future.
Personal Insurance Limits or Excludes Business Coverage
Contrary to what many people believe, your standard homeowners insurance, renters insurance and auto insurance likely don’t have much, or any coverage at all for what has been termed as “business pursuits”. For homeowners’ insurance and renters insurance, that means your possible reimbursement for the loss of business equipment, or court damages would be limited to no more than $2,500 for a covered loss. That will be a drop in the bucket if you have a lot of computers, software, equipment, inventory, or other physical business property that could be lost to theft or natural disaster.
When it comes to your auto insurance, either you’re covered – or you’re not. It all depends on the language in your policy and the circumstances of your work and the accident itself. This means that if you were to hurt someone in an accident, you might be left high-and-dry, on your own to cover the attorney fees, lost wages, and any other damages awarded by the court.
Do You Need Small Business Insurance?
If you have a home based business, a side job of some sort, or use your personal vehicle as a requirement of carrying out your work duties, you should be talking to your local agent about your possible exposures. Some of the questions that he or she may ask are:
- What would happen if a disaster forced you out of your home or an accident disabled your car?
- Do you have product inventory stored at your home? How much is it worth?
- What would it cost to replace your computers, software and equipment?
- Do you perform service work on premise, such as a customer’s house?
- Do customers come to your home for any reason?
How you answer these questions will help them choose what kind of commercial insurance you would serve you best.
What’s the Best Small Business Insurance Policy for You?
That’s a tricky question. The answers to the questions posed above will vary from business to business. As such, every business has different insurance needs. The best small business insurance choice would depend on your specific operations. The most common types of policies to consider are as follows:
A Business Owner’s Policy (BOP) offers the most financial protection for both liability and property damage. This coverage may include such coverage for losses due to theft, loss of data, loss of income, and general business liability. It may also cover the structure from which your business operates. A BOP may also provide some degree of coverage off-premise, including liability coverage for products you sell or parts you install. It’s an excellent choice for auto mechanics, convenience stores, electricians, plumbers, restaurants, and other similar businesses.
A Home Office Policy provides less protection than a Business Owners Policy. This insurance coverage combines homeowners and business insurance. It may provide protection for general business liability, lost income and ongoing expenses like payroll if the business can’t operate due to damage to your home. It might be a good choice for graphic design artists and wedding photographers or other service-based businesses with few onsite visitors.
A “Business Pursuits” endorsement provides the least protection for a business, but might be all that one needs depending on what work they are performing. It is basically an add-on to your existing homeowners’ insurance that allows for the “business pursuits” that otherwise would be excluded. It’s not recommended for businesses that have costly equipment or customers visit on site, but it could be a great choice for Tupperware party hosts, eBay auctioneers, and other part-time jobs with limited exposure.
In addition to the policies outlined above, a commercial auto insurance policy might be required for certain types of jobs that require the use of your vehicle. Though personal auto insurance may provide some coverage for some activities, there could be situations where you would need a commercial auto policy or higher liability coverage.
There are other policies that also might be recommended by your agent. These coverages include Professional Liability, Worker’s Compensation, Employment Practice Liability Insurance (EPLI), Health, and Disability insurance or another type of policy.
How Do You Insure Your Small Business?
You likely started your small business to make money, the last thing you want it to do is end up costing you a fortune instead. Contact Smith Insurance and Financial Services today to get started with finding out the right small business insurance policy (or policies) for your business. The sooner you talk to us, the faster we can help protect your assets, allowing you to carry on with building your business.