Everyone knows that they need a Homeowners Insurance when they own a home and a Car Insurance when they own a car. Interestingly enough, the same does not hold true when it comes to owning a business. Small business owners often underestimate their insurance needs and there are several reasons for this, some of these we will discuss in this blog.
- What They Don’t Know Won’t Hurt Me. This applies when you use your personal car for business purposes and you don’t tell your agent. Car usage is one of the rating categories (pleasure, commute or business) and if you use your car for business as well, such as making deliveries, meeting clients, or going to client sites, you need to make sure that your policy reflects it. Your premium will be slightly higher, BUT you will be covered in case something happens during the business use. If you get into an accident or your car gets damaged while on business and your car policy is set for commute or worse – pleasure, you may not be covered. Or you will be covered but your insurance company will make you pay back the difference in premium. If you use your car exclusively for business, you should get Commercial Auto policy.
- My Business is Too Small For Insurance. WRONG AGAIN! There is no such a thing as a business too small for risk. Every business that has customers, vendors, employees, products or property has RISK. Customers, vendors, and employees can get hurt on your premises, by your product or by your service and sue you for all you have and more. In addition, your business property can get stolen or broken and you may not be able to continue with your business without it. Does your business own computers, video equipment, freezers/coolers, lawnmowers, other valuable equipment? You need Property Insurance! Some professions require Errors and Omissions/Professional Liability Insurance such as Doctors, Lawyers, Insurance Agents, etc. In most cases, you won’t get an office or building lease or even jobs without a proof of General Liability coverage. Small business policies are often affordable, you can get insured for less than $1000 a year for $1,000,000 of liability.
- My Homeowners Insurance Covers My In-home Business. Not really. Homeowners insurance includes liability coverage but this Liability is only for PERSONAL not BUSINESS pursuits. So just like in the point 2 above, if you have customers, vendors, employees, products or property, you need business insurance and your standard homeowners insurance will not cover it. A business general liability insurance protects businessowners against liability claims for bodily injury and property damage arising out of premises, operations, products, and completed operations; and advertising and personal injury. So even if you don’t meet your clients at your home, you are still liable for their injuries or property damage due to your operations and products. The good news is that some low-risk businesses can be added to your homeowners policy on the cheap, but some will require separate business policy.
- I bought a new home and will use the previous one as a rental property. I will keep it insured under a homeowners policy. You shouldn’t. A Homeowners policy covers only owner-occupied single-family residences. Putting tenants on your property increases risk not just for you but also for the insurance company, who will not look at it favorably when they receive a claim and find out that the property has been tenant-occupied. Instead, you should get a landlord’s insurance also known as Dwelling Fire policy that would cover the house and ask the renters to get Renter’s policy that would cover their belongings. This is especially true if you own several rental properties.
- I can get business insurance the same day just like car insurance. This is something we see a lot. Unfortunately, business insurance is way more complicated than car insurance as each business is different and has different risk exposures. Business insurance quote is usually not instantaneous, forms have to be filled out and submitted to insurance company underwriters, who may need a few days to review the forms and provide your agent with a quote. They often have questions and ask for additional documentation. After you receive the quote, there are applications to sign, payment to be submitted and a binder to be issued, which may also take a few days based on how responsive and busy is the underwriter. Your agent knows the process so please give him or her some time to go through it and with good planning, you can get your policy on time.
If you need business insurance and don’t know where to start, call us, we can walk you through the process and find you the best coverage for your needs! Call our office at 972-584-1286 or email us!