In the good old days of business, an entrepreneur could get by with a liability policy and worker’s compensation, given there were full-time employees. If something drastic happened to the property, you could move to another building and start anew with the insurance proceeds. In the present era of ease and speed, recouping loss is not so simple. Tangible items have been replaced with electronics and signals from air waves, in producing income. Drop shipping products to customers has opened a whole new realm of liability through third party sources. Yes, the world of entrepreneur insurance coverage, has changed, and not for the better. Here are some things you need to know.
Let’s assume you have a small business that is operated out of one room in your personal home. 90% of your sales consists of using the telephone and your computer. The other 10% involves traveling to make presentations. You have two part-time employees to help out with orders, accounting and marketing. The products consist of designer clothes that display your creative designs. An off-site manufacturer makes the clothes and ships the merchandise. Without any inventory or full time employees, you may wonder why you would need much business insurance.
Liability insurance covers a larger scope than just paying for a client that may slip on a patch of ice outside your front door. The variety of damages that have been filed by clients, has grown to include misrepresentation of product or service, not adequately labeling safety precautions, negligence in how a product performs, plus many other arguments that have been known to tap into a company’s funds. Remember the coffee that was hot enough to scold a customer? There will always be a new angle for claims and liability insurance will protect you through legal representation, medical expenses, settlements and business and personal loss.
Property Insurance for Home-Based Companies
If you feel secure in the fact that you have a great homeowners policy, think again. Your company could be excluded from your policy as not being part of the living quarters. Never wait until disaster strikes to find out what your insurance company will cover. Sit down with your agent and spell out everything. Some homeowner policies will offer a rider to include the property portion of your business, but not any type of liability coverage.
A basic home based business policy is designed to remove the arguments from a homeowners policy over what is, and is not considered, residential and business losses. Many of these policies are now being offered through your auto and homeowners policy, giving you a better price. On-site and off-site liability coverage, relocation and lost income protection, and protection of accounts receivables, are the most popular points that should be considered.
Business Interruption Insurance
Business interruption insurance is a fairly new type of coverage that many entrepreneurs are discovering a need for. With hurricanes, tornadoes and power outages becoming more prevalent, electricity is almost as valuable as gold. Electricity controls our entire business world with communications, sales, and storage of records. A generator is great for short, unexpected outages, but when hours turn into days, or days into weeks, your entire life can be impacted.
Customized Business Coverage
A growing concern among entrepreneurs is data breach. Even the most elaborate computer systems, owned by large corporations, fall prey to hackers. Sensitive data, customer information and credit card numbers can be stolen. Balance your risks and what type of coverage you might want to carry.
Customer specific insurance coverage is another area of liability insurance. The reason behind this coverage is to protect the client from damages or liabilities that your product or service may cause. Before entering into an agreement with a prospective client, be sure to ask for their insurance requirements. You will need to add this cost to your initial bid.
Disability insurance is a must when you rely upon yourself for the day-to-day operations of your company. Having necessary income, should you suddenly become ill or involved in an accident, is crucial to maintaining your business and family. Too many entrepreneurs rely on the fact that they will always be able to handle their company, and discover, too late, that no one is immune to bad situations.
A good insurance agent should be able to present all of these options, and more, when you explain what type of business you have. If they merely present a basic liability policy, look elsewhere. You need to have all of the options in front of you in order to make good decisions on the future of your company. Insurance does not have to be complex, but the changing environment does have to be understood. Also, search for a company that has a good track record with entrepreneurs. Social groups that share the same type of business that you have is a great place to start for discovering the best insurance firms.
Insurance coverage will continue to migrate into new entities, as the cyber world extends further and further. With a good agent and insurance company, they can help you stay updated on your future insurance needs.