If you own a small home business, finding out about insurance–what it covers and who needs it–is one of the most important things you can do for your business.
Unfortunately, when you first start out, you may never even consider this financial and protective necessity. If you do not, you may jeopardize your business.
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Perhaps, as a small business owner you focus on practical matters, like health insurance and tax obligations. As a result, the need to purchase small business insurance never really crossed your mind.
This is completely understandable, especially with the rising cost of health care. Making sure, you receive quality medical attention is definitely a top priority for most. But don’t lose sight of your need for business insurance coverage either.
It is not too late to do something about it. Today could be the start of another step towards the educational process that accompanies being an entrepreneur. All you need to do is schedule a few hours to investigate your options. If you are lucky, you will find that you qualify for many benefits, simply because you do run a home-based business.
Use a Good Resource for Investigation Purposes
If you did not know about small business insurance, you probably do not realize that there is a great online resource available for you in the U.S. Small Business Administration.
This federally funded SBA website can provide you with all kinds of information to help you decide if this coverage is the best option for you or not.
In addition, you can also gain keen insight into different ways to help your business grow.
They specialize in giving free advice to companies with smaller staff sizes and even if you are the only employee, you may be eligible for most of their training sessions. You could even discuss your plans with one of their expert counselors to make sure you have all of the basics taken care of and you’re not forgetting anything.
Since your immediate need is insurance, you should first find out about the coverage selections. This will help you understand how the protection works. You will also need to know about state laws and regulations. Once you have a better direction, you can start looking at companies that offer this service to people just like you.
According to the SBA, businesses from the home usually require additional safeguarding above a standard homeowner’s insurance policy. There are specific issues that arise with businesses and a certain level of risk involved. You cannot rely on your homeowner’s policy for everything that can occur on a daily basis.
Verify the Mandatory Levels of Insurance
Under normal circumstances, the nature of your business dictates the level of insurance you need. If you have a contracting business, for example, you may need to purchase insurance because of liability issues. For the home business industry a good correlation is an online retail business that stores inventory in the home, such as in the basement or garage.
You should check with your state to verify any mandatory levels of insurance coverage. For instance, if you live in Massachusetts, you can go directly to the website for the Massachusetts Office of Consumer Affairs and Business Regulation and get the details you require.
Residents of Maryland have the Maryland Insurance Administration as their main guide. Both of these resources, just like others in every state throughout the nation, regulate the industry and provide consumer protection.
All you have to do is search for your state and follow the appropriate links for business insurance. There, you will find all of the governing laws for your home-based business, with the proper answers to address your concerns.
Typical Home-Based Businesses that Require Insurance
Insure U has very interesting facts and statistics about home-based business insurance.
On their website, Inusre U states that almost 50% of the companies in the United States that help stimulate the economy are actually small home businesses.
These types of businesses include retail workers, musicians, educational tutors, childcare administrators, independent contractors, and consultants. With the increase of America’s reliance on personal computers and software technology, individual computer technicians and technical support staff businesses based out of a person’s home are also growing fast.
Other astonishing information shows the approximate number of small companies that exist. Out of the reported 50%, sole owners encompass 90% of the total work-from-home industry. This means they have no employees and work for themselves. Only 0.2% of all of the small businesses have more than 20 staff members included in their head count as regular employees.
You must base your insurance needs on your personal business requirements. You cannot afford to make costly mistakes, because the rates are not cheap and, as a sole proprietor, you could be affected greatly by those mistakes. You should study your business, and know what type of risks you carry before you go looking for a business insurance policy. This will help you figure out the proper level of coverage to select.
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General Liability Insurance for Home-Based Businesses
Before you go looking for a separate liability insurance policy, see if your current homeowner’s insurance provider will allow you to add an endorsement. This is like a rider on your policy that allows you to increase your limits for things like business equipment if a fire or flood occurs.
Under standard policies, the rates for adding general liability coverage to your homeowner’s policy may only increase about $15 to $30 more per year.
If you cannot receive an endorsement, a general liability policy will help protect you against legal issues, including injuries, accidents, and negligence. These policies are similar to passenger auto insurance policies that guard against bodily injury, medical expenses, and property damage.
The liability insurance also protects you from problems like slanderous accusations. This is extremely important with clients using the Internet and email to hide behind these days. They may send vicious messages or attempt to expose you on review sites.
You can utilize your general liability insurance to sue them in court. Conversely, if you make a mistake and respond in a negative manner out of anger, you are protected from lawsuits or judgments.
Professional Liability Protection for Companies with Few Employees
Professional liability protection is another wise choice if you provide some kind of public service, like a childcare program or a consulting firm. Psychiatrists also utilize this level of coverage.
It guards against malpractice lawsuits or negligence. If a child eats something and has an allergic reaction, the parent may decide to seek compensation from you. This could damage your business.
The same can be said for someone who consults with you about their finances and does not heed your warnings about poor investments. They could prove that they used your services and you mislead them, and then try to sue you for misrepresentation or worse.
A psychiatrist could meet with a patient and later decide to use their confidential appointment as an excuse to participate in irrational behavior, causing negative implications. They could try to hold you accountable because of your association with them.
Maybe you did cause a problem, but you were not malicious in your intent. This could fall under negligence in most states and, regardless of the purpose, the victim could hold you responsible. Without sufficient protection, this could ruin your business.
Professional liability goes a long way to protect your business from failing due to time and money lost during the litigation process.
One of the ways that many small businesses lose revenue is because of clients or customers who decide to sue.
If you have a high-risk profession, you should consider a policy that includes this type of coverage to ensure that you can continue working, even if something happens that you could never foresee or prevent.
Disability Insurance Coverage Protects You When You Can’t Work
Disability insurance coverage protects you when you cannot work. This type of policy is something you should really think over; especially if you are the sole breadwinner in the family. If you injure yourself and cannot perform your regular duties, you will not receive a paycheck.
Since you are your own boss, this means the bills will not be paid and you can start to lose everything you worked hard to obtain. Many people who own their own business fail to purchase disability insurance because they think it is unnecessary and a waste of money. However, what happens if you have an accident and need to stay in the hospital?
You could easily slip on your staircase on your way to your home office downstairs and damage your back. Back and neck injuries occur in home settings more than any other type of injury.
Without some type of contingency plan, your finances will suffer. Any savings you have can dwindle quickly and, before you know it, you could be in deep financial trouble.
If you decide to purchase disability insurance, try to find a provider that can get you a very brief waiting period. You may have to pay a higher up-front premium, but if something does happen, you will have sufficient income through your claim without having to wait weeks or months.
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