Without business insurance, business owners may have to pay out-of-pocket for property damage or legal claims against their company.
Do I need business insurance if I work from home?
This is a big question with several moving parts. In most cases, your home insurance will cover limited business equipment or inventory, but will not cover clients coming to your home. It will also not cover any liability for your business operations.
A standard small business in Washington State can expect to pay between $300 and $10,000 annually for their general liability policy. A general rule is budgeting 5% of your estimated gross sales for insurance.
What is business liability insurance?
There are several parts to business insurance. Here are the main parts:
–General liability insurance for causing injuries and/or property damage.
–Professional liability insurance, also known as errors & omissions (E&O) for work mistakes that negatively impact a client.
–Commercial auto insurance for accidents involving business-owned vehicles, including loading and unloading the vehicle.
–Employer’s liability insurance to protect against employee injury lawsuits
Also known as business liability insurance, General Liability coverage can protect you from claims like bodily injury, property damage, personal injury and other claims that may come out of running your business operations. Most businesses need general liability insurance!
Also known as Errors & Omissions (E&O), protects your business in claims of negligence, malpractice, mistakes, E&O, while in professional service. Most businesses can benefit from this coverage, but specifically businesses whose errors can cause a huge impact – like accountants, business coaches, insurance agents, real estate agents, businesses offering expertise or advice.
This is coverage for a company’s use of vehicles, in the course of business. Examples would be delivery, utility trucks, chauffeur services, transporting clients, vehicles with your logo. There are differences in Personal and Commercial Auto Insurance including adding coverage for Loading and Unloading of the vehicle.
This coverage helps business owners pay for employees that get injured or sick due to business activity. If you have employees, it would benefit you to have this coverage as part of your business insurance package.
You might also hear Business Interruption insurance as business income coverage or extra expense coverage. This coverage can protect lost income because of a covered claim even.
Protecting businesses from fallout in the event that a product causes injury or damage to third parties. If you manufacture, distribute or sell a product, this would be a helpful coverage to have. Examples would be restaurants, specialty food stores, coffee shops, skincare manufacturers.
This coverage protects businesses from the expensive costs of data breach or malicious software attacks. If it is important that your clients’ data is secure, you need this coverage. Examples would be accountants, consultants, IT services, marketing companies, real estate or insurance agents, retailers, restaurants.
What is Workers’ Compensation Insurance?
Workers’ compensation coverage helps your business pay benefits, and wages, to workers who are injured or become disabled as a result of their job. In Washington State, this coverage is purchased through the Washington State Fund, once you have obtained your business license.
What is Personal and Advertising Injury Coverage?
This coverage is typically included as part of your general liability policy. It will help your business cover against any legal fees, settlements or judgments resulting from offenses like slander, libel, violating privacy, improper advertising, Copyright violations.
A “Claims Made” policy is a type of insurance that pays when a claim is filed, regardless of when the claim actually happened.
Ideally, the sub should have their own insurance. Some insurance companies will let you extend your coverage to subs, but some companies specifically exclude them. Check with your agent to be sure.
This type of policy combines business property and business liability into one policy. This policy can include coverage for your property, business liability, business interruption, personal or advertising injury, data breach.
A Certificate of Insurance (COI) is provided by an insurance company to verify the existence of an insurance policy. It lists the limits of insurance coverage on the policy, and can include an Additional Interest, when requested.
A Bond is a financial guarantee that your business is going to do what it was paid to do. If your business does not perform, the Bond can be sued to pay back the customer. Bonds can be referred to as a “line of credit” that you never want to use. The rate of a Bond is based on the limit required and your credit score.
In most cases, your cost of insurance is based on your “Insurance Footprint” – what you do, and how much you do of it. A Business Insurance Audit is done to make sure that businesses pay the correct cost of insurance. Once the audit is complete, the insurance company can bill you the difference of what you should have paid.
An Additional Insured (AI) is a person or business added to an insurance policy, who is not the policy holder. Once added to the policy, the AIs can have their defense costs covered if sued because of something you did. Additional Insured’s may have a risk exposure in the property you are working on, or activity you are doing.
If you have any other questions that we can answer, or clarify, please share with us! You can reach Lisa via email: firstname.lastname@example.org
Disclaimer: This is a general overview, with the intention of bringing awareness to coverages, options, policy information. However, coverage varies between carriers and states. Please check your policy for specifics.