Business insurance is not the most exciting topic, and it often falls to the bottom of the Solo PR Pro’s to do list. But while plenty of potential clients will never even ask if you carry it, many will actually have millions of dollars of business insurance requirements specified as part of their standard contract.
In addition to showing clients that yours is a “real” business and not a sofa sideline, the right kind of business insurance policies can protect you from a rainy day and give you peace of mind, too. Though this post is not a substitute for the advice of an insurance professional, by educating yourself now about the types of business insurance available, you can be ready if/when you need it.
Commercial General Liability
This is the “business liability” insurance that clients most often ask you to have. Why? Because this type helps covers them if, for example, you injure someone while driving on business on their behalf.
The first time a potential client says you must carry $1 million in general liability coverage (or more) to win their business, the tendency is to freak out! But, no need to worry. Fortunately, your homeowner’s insurance carrier can usually provide this for you, and it’s typically only a couple hundred dollars a year.
Professional Liability Coverage (Errors and Omissions)
Because of its relatively high cost, whether to purchase “E&O” insurance is a tough judgment call for many independent consultants. It’s designed to protect you from any financial loses your work may inadvertently cause a client, due to negligence or inadequate quality controls.
When you analyze your options, take into account the industries you serve and the amount of litigation in them, as well as your level of exposure. This type of insurance is best purchased through an insurance broker (as providers vary by state) – ask your homeowner or car insurance provider for a broker recommendation.
Business Property Coverage
This insurance protects your building, its contents, and against loss of income. If you work from home, a certain amount of business property coverage may be included in your homeowner’s policy, so be sure to ask. If you need additional coverage, the same company can usually provide you with both – at a discount.
Business Interruption Coverage
This coverage protects against losses due to a temporary shutdown (as with a fire), and provides reimbursement for lost net profits and necessary continuing expenses. Though it sounds good, be sure to crunch the numbers and read the fine print: sometimes you must be out of work for several months before it kicks in, and you’d be better off putting the money this policy would cost into savings (which you could tap in the event of an emergency).
Personal Liability Umbrella (Excess Liability Policy)
This insurance provides protection once the limits of a standard liability policy have been met. Though this is not technically business insurance, it can sometimes be combined with your other policies at a given insurance carrier (if you have both business and personal with the same company) at a steep discount, giving you more liability coverage in all aspects of your life.
What’s been your experience with business insurance? Do you have some minimal coverage? Any tips for saving money? Let us know in the comments.
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