Many people these days are finding new ways to make some extra money on the side in addition to their usual income stream. Are you one of them? Have you recently started:
- Delivering pizzas or newspapers using your personal vehicle?
- Hosting Tupperware parties or selling other products in a similar way?
- Selling items on eBay, Etsy, Amazon or another online marketplace?
- Cutting hair or doing handy work for your neighbors and friends?
- Giving people rides in your car through Lyft or Uber?
Anyone who answered “yes” to any of the questions listed above should probably have small business insurance. Of course, that’s not even an exhaustive list – there is a whole range of other activities that should be covered by a small business policy.
So You Think You’re Covered?
There are numerous small businesses operating throughout Wisconsin, and there are just as many possibilities of an accident happening while pursuing business activities. Consider the following.
- You’re giving someone a ride through an arrangement with Lyft or Uber. You have a small accident that results in an injury. You turn a claim into your car insurance company only to find out that your standard auto insurance policy won’t cover losses while using your car for hire.
- You fix computers on the side to earn a few extra dollars. A customer stops at your house to drop off their laptop. They slip and fall on your steps, and their back goes out. You find out that your homeowners insurance policy has a “business pursuits” exclusion that limits your covered loss to only $2,500.
- You’re hired to alter someone’s family heirloom wedding dress. You step out for a few moments only to return to find your dog has torn it to shreds. You’re liable for damages and legal fees – guess who’s paying for this?
In actuality, there are approximately 18 million home-based businesses operating within the United States. While these pursuits can be an excellent way to generate extra income, about 60 percent of these businesses are operating without proper insurance. Too many people mistakenly believe they’re covered by one of their existing policies, such as homeowners insurance, renters insurance or auto insurance, when it is simply not the case.
Most personal homeowners insurance policies specifically exclude business pursuits or limit coverage. In the case of a business-related auto-accident, either you’re covered, or you’re not, depending on your policy’s language. Do you want to take that risk?
Different Types of Insurance for Business
There are a number of ways to properly insure a small business, here are a few of the more common methods
Business Owner’s Policy (BOP)
A BOP offers the most protection for a small business. It covers liability and property damage, including such hazards as fire, theft, loss of income, general business liability and more. BOPs also offer some amount of coverage for incidents that occur away from your home, such as problems caused by products you sold or services you performed. A Business Owners Policy is often a good choice for electricians, plumbers, auto mechanics and other similar service, or product-based businesses.
Home Office Policy
A Home Office Policy is the next step down you might say, but could be appropriate for many small businesses. This type of policy combines a homeowners’ insurance policy with a small business insurance policy. These policies offer coverage for general business liability, theft, lost income due to damage to the home, and more. This is a good choice for creative freelancers that work primarily at home without direct interaction with clients.
Business Pursuits Endorsement
A Business Pursuits Endorsement offers the least protection for a home based business, but once again, might be all one needs, depending on their particular small business. This coverage is simply adding additional coverage to your current homeowners insurance policy. It might be a good choice for the person that hosts Tupperware parties off-site, sells items on eBay, etc.
As you can see, each type of policy is different and they provide coverage only for certain events and up to limited amounts. Depending on what you do and whether you have employees, you may need additional insurance for your small business, such as commercial auto insurance, professional liability, worker’s compensation, or health and disability insurance.
Which is right for your business?
As you can see, there are a few different options when it come to insuring your small business. Which option is best for yours depends on a number of things such as:
- Do you have customers visit your home
- How much it would cost to replace your equipment
- Do you have product inventory
- Do you use your vehicle to visit clients or deliver goods?
Get Covered with Small Business Insurance
If you’re pursuing a side-job or home-based business, an investment in small business insurance is worth the cost. Your standard homeowners policy or auto insurance policy simply won’t cover your business pursuits. Give us a call today to find out what types of policies you should carry to properly insure your small business.