I’m a small business owner, do I need additional liability insurance?
I have a small business, do I need additional liability insurance?
As a female business owner💪🏽, I have been both discouraged by the number of women who have had to drop out of the workforce due to the difficulty of juggling careers with small children 👶🏽, and encouraged by the number of women I meet who have started a small business, or have been busting their behinds 🏃🏿♀️ ramping up business this year. These small business women inspire me with their creativity👩🏼🎨, networking acumen, and general love ❤️ and desire to help as many people as possible with their skills 🎨 and expertise🧠.
The one thing that worries me, however, is that many women have launched businesses with little formal guidance. When I ask them, “Do you have the correct insurance coverages to be sure you are not taking on any unnecessary risk exposures?” – most will tell me, “Tell me what I need and why and how to get the correct coverage?” So let’s get to it 🏃🏿♀️.
The first thing to address is your business structure. Will you start as a solo, or LLC? I always recommend consulting with a small business attorney. They can prevent unnecessary costs and headache and get you started in the right direction. However, the correct business structure typically only helps to protect your personal assets.
Which reminds me, as I insert a brief aside here, but do you have Personal Umbrella Liability coverage? If you do not, as a Certified Financial Planning Professional, I typically recommend to my clients to layer an Umbrella Liability policy to their homeowners and auto coverage. For a $1 – $2mm liability coverage, it typically is a low-cost addition for a great additional layer of protection for your personal assets should you be sued for whatever reason.
One caveat, however, is that if you do not currently have an umbrella policy, many carriers will ask to review all of your coverages, instead of offering umbrella as a one-off. This is a good thing 👏👏, however! Most of us do not regularly review our coverages, while we should review them annually. Products change, coverages change, and often we can improve our coverage with minimal cost.
Next, let’s turn to the 6 types of business liability coverages to consider:
1. General liability insurance 💵.
a. Applies to any type of business.
b. Protects against many types of financial loss incurred for a variety of reasons, for example, property damage, or if you have to defend yourself in a lawsuit.
2. Product liability insurance 🎁.
a. This applies to businesses that manufacture, distribute, or wholesale a product.
b. Protects mostly for defective products incurring bodily harm.
3. Professional liability insurance 👩🏻💻.
a. This applies to most of my fellow female (and male!👨🏻💻) business owners who provide services.
b. This protects against financial loss as a result of malpractice, errors, and negligence.
4. Commercial property 🚘🏪 insurance.
a. This is for businesses with significant amount of property and physical assets.
b. Wide range of coverages for these assets.
5. Home-based 🏡 business insurance.
a. Most of us!, especially now, that we run businesses out of our home.
b. We can add this coverage to your homeowners as a rider to protect your business equipment and provide liability coverage.
6. Busines 👩🏻💻 owner’s policy, AKA BOP.
a. This also applies to most business owners, but ESPECIALLY home-based businesses.
b. Combines most necessary coverages into one bundle, potentially saving premium dollars for the business owner.
Once you move beyond a solo-practitioner and have employees👩👩👧👧, there are other coverages required as well. Worker’s comp, anyone? (we’ll leave that one for another day.)
So now that you have an idea about the types of coverage to consider, the next step is to find an agent you trust. Call ME to help! I’ll work with you to determine the risks involved with your business, and the type of coverages you should consider. We’ll then shop for the best provider for your particular circumstances.
These insurance costs are typically tax-deductible as a business expense. So while yes, you must pay them from your cash-flow, they are generally tax deductible. So be sure to let your bookkeeper and accountant🧮 know. Also, we like to review these coverages at LEAST annually, and sometimes much more frequently if your business grows and expands into other product or service lines.
So don’t panic! We’ve got this. Together, we will work to ensure you have a conversation regarding your company’s risks and exposures, and work on finding a policy that fits your budget and allows you to sleep at night.
Wow- that is a LOT. The point of the above is to educate 👩🏾🎓 you, not to confuse 🤷♀️ you or make you an expert in the type of insurance you need. It should, however, prompt you to run to an agent (ME!) who will ask you all the questions necessary to figure out what types of coverages to have. We didn’t even talk about cyber-liability coverage here – I’m leaving that for a new blog topic.
So go, be awesome. Grow your business! Help more clients! Just be smart, and cover your own risks while you do it. I can help you - just reach out.