There is much to learn when you first start up a small business, and you may be concerned about making mistakes that will cost you time and money. However, the nature of entrepreneurship gives you the opportunity to learn about what should be in place before you launch your company, and one area that you should not overlook is business insurance basics. Knowing how business insurance differs from auto and homeowner’s and which components are the most necessary may help you create an affordable policy that offers full coverage as well.
Like many small business owners, you might be running your company from a home office in order to save money. While this might be advantageous to you, especially in the face of rising office space rental costs, it is important to understand that most homeowner’s policies do not cover a home-based business. As a result, any damage or theft that occurs to your business area, stored products, furniture, or electronic equipment related to your company may not be covered. To protect your small home business, ask your local insurance agent whether a business rider can be attached to your existing policy.
If you produce one or more products for your small business, then you will be held liable for their safety. This kind of liability protects you against financial loss in the event of a product malfunctioning and causing harm to an individual. For example, if you make and sell an electric grooming brush for pets and one shorts out and causes the user burns, product liability insurance could cover this type of incident. Your insurance agent should be able to offer you more information on how much coverage you need.
Errors and Omissions
If you provide services instead of products to your customers, then you should consider adding an errors and omissions clause to your business policy. This type of insurance is also called professional liability insurance and protects your interests against negligence and errors that may occur in the course of servicing your customers. While it is no doubt your intent to give your clients top-notch service, errors and mistakes can happen. Not every small business requires this type of insurance, but you may want to look into whether the nature of your company and where you operate from dictates that you carry it.
Avoid a Bare Bones Policy
As an entrepreneur, you probably look for savings in every facet of your business. However, when it comes to creating an insurance policy, you may want to avoid cutting corners. Leaving certain riders off your policy or running operations with only general liability may help you save money at first but not serve you well in the long run, especially if something should go wrong. It is almost impossible to predict when a fire, burglary, or accusation of negligence or harm will occur, so covering your bases with a comprehensive business insurance policy is a wise choice.
Whether you work from home or out of rented office space, launching your own company is always an exciting venture. However, taking the time to learn about what kind of business insurance you need and reviewing your policy with a qualified agent will help you grow as an entrepreneur and boost your chances of success.