If you are operating a business from home, there is no question that you should have business liability insurance. While most people think that their homeowner’s insurance will cover liability, the fact is, if a UPS delivery man becomes injured while delivering a business document to you, your home owners insurance policy will not cover the cost of treatment.
Your homeowner’s insurance policy might, in fact, be canceled if you did not disclose in the beginning that you have a business operating from home. So, if you are serious about your business, get business coverage even if your revenues aren’t enough to break even. Rather than adding to your profit, insurance shields you from losses that can amount to thousands of dollars, which you would need to pay out-of-pocket if you don’t have business liability coverage. Can you imagine paying thousands of dollars in treatment for that UPS guy who hurt his hip while delivering a package to you?
There are three types of BASIC business insurance depending on the kind and size of business you have. There are homeowner’s insurance productsthat offer business insurance as an add-on or rider. As you might expect, because it is a rider policy, the coverage is not that big. For the most part, you can expect to get limited coverage of up to $2500. Again, the cost is not that great. But then you would only need to pay around $100 per year.
This type of policy is good for people who do not receive visitors at home, don’t have a lot of business equipment, and are operating as a one-man team. It is ideal for accountants who work for clients and drive to their locations.
If you are serious about your business, though, an in-house business insurance policy is the first step in the right direction. This type of policy covers business equipment and liability of up to $10,000. It has a broader spectrum of coverage. For example, if money gets stolen on the way to the bank for deposit, your coverage will pay for the loss. Also, if you have a maximum of three employees, injuries will be covered by the same in-house business insurance policy.
How much do you pay in premiums? It ranges from $250-$500. As we said before, coverage amount is up to $10,000. When shopping for an in-house business insurance, make sure to do research in your state. Different states have different rules. And it is highly likely there is an insurance product for your specific type of business. For example, you will find insurance products specifically for videographers.
If you have more than three employees, own expensive business equipment, and have visiting customers or if you leave your equipment, such as a photo booth, at the home of your clients, you must have a regular business owners insurance for my Florida business . This type of policy is very comprehensive, and it is what brick-and-mortar businesses pay for.
What are the circumstances covered by this type of plan? They include loss of business equipment and other assets, as well as loss of critical documents. Not only that, you are also protected from business losses stemming from power outages or natural disasters. You are also protected when you are driving your personal car for business.
How does business owner’s insurance cost? For comprehensive coverage of up to $2 million, you can expect to pay $500 in premium.If you have $25,000 worth of equipment, an in-house business policy will not be enough considering that you will also need to make provisions for liability arising from body injuries.
The typical business insurance policy is comprehensive,but as your business grows, you might need to get additional coverage not covered by your main business insurance plan. For example, you will need to get additional coverage for your business vehicles and your workers compensation. If you fancy becoming a large corporation, you will need to get special coverage for your key employees like your CEO and board of directors.
When it comes to shopping for insurance, make sure to check if there’s a product specific to your business. You can get information from insurers that specialize in business insurance. Also, get a quote from at least three insurers. Do an apples-to-apples on the coverage amount, premiums, and extent of coverage.
Even with extensive research on the different business insurance products, it is highly likely that you could end up over insuring your business or paying for something you won’t ever need. To avoid this scenario, make sure to work with a business insurance auditor. It will cost money, but the savings you get as a result will more than pay for itself.
A business insurance auditor is different from a regular auditor in that he doesn’t check your financial records. Instead, he takes a look at your business and determine what type of coverage you need and where to get it. For many businesses, working with a profession has given them the opportunity to save money on insurance while adequately protecting their business. To find a business insurance auditor in your area, you can do a Google search. Just make sure that the one you hire has a proven track record of doing a good job and keeping the client’s financial welfare in mind.
If you already have insurance, you can work with the auditor to determine where you are overpaying and where you need more protection. Most of the time, business owners after signing a contract for their insurance policy, leave the paperwork on the shelf not checking out the specifics of their coverage, especially the riders. You can ask your auditor to look at your existing policies for you.
According to the Independent Insurance Agents and Brokers of America, 61% of all home-based businesses in the in the country do not have adequate insurance coverage. It is a sad state of affairs. Hopefully, though, you have the good sense to get coverage.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin