Insurance Questions Answered for the Small Business Owner


Q: Do you need business coverage if you work from home?

A: Very Likely.

A lot of homeowners’ insurance policies do not cover business related damages that occur within the home office. Double check your home insurance policy for your detailed coverage information. If you are unsure, contact your insurance carrier and/or agent to find out. Many home-based business owners find out that they don’t have the proper coverage until too late…after they have to file a claim!

Even if your homeowner’s insurance protects some of your business property, chances are good that the coverage will not be in effect when you’re traveling for work, ie. flying across the country for a conference or even meeting with a client for lunch.

The solution? A simple general liability insurance policy -or- a business owners’ policy that offers home-based business owners the protection they’ll need…both basic business property (such as laptops) as well as certain types of injuries (such as slander)…wherever the incidents occur. The right business insurance can provide excellent protection, but small business owners should do their research before deciding on their coverage.

Q: Do you need Errors & Omissions insurance even if you only provide advice?

A: Yes.

You can be held liable for any negative impact that your advice may cause a business especially if you are a subject matter expert. In fact, you could be sued by a client if you fail to live up to the expectations contracted.

Getting an E&O policy will provide funding for legal services needed to defend yourself against claims of negligence…even if the claims are false. The legal defense costs are often the most expensive part of an E&O lawsuit – they can costs tens of thousands of dollars.

Example-A marketing consultant tells a client that he/she can help the business’ ROI increase 20% in 2 week time span. Even if the consultant does everything correctly, clients could be engaging in practices that would potentially decrease the ROI…perhaps even unknowingly. By the end of contract, ROI could be much lower than it was prior to the consultant being hired! Now the consultant is at risk for a law suit – “failure to perform services as contracted”. Careful attention to detail on how a contract is worded, as well as, a reliable E&O policy, will give the consultant proper business protection.

Q: Do you need Business Auto Insurance if you drive your own personal vehicle?

A: It depends on what the vehicle is mostly used for.

Many personal auto insurance policies exclude coverage for commercial (aka business) use. In other words, if you’re running an errand for your business, ie. picking up office supplies or driving a co-worker to the airport for business, you may run into some difficulties with your insurance carrier. The proper insurance for your vehicle will depend on primarily how it is used. For example, if you use it most for business purposes, and sometimes for personal, it is likely that you need commercial coverage. If the vehicle is used mainly for personal purposes, with the occasional business errand, then personal auto coverage should be sufficient. Questions that will help determine what kind of auto policy you will need:

  1. Who owns the vehicle?
  2. Who drives the vehicle?
  3. How is the vehicle used?
  4. What type of vehicle used?
  5. What liability limits are required for your business?

As every small business owner’s situations can differ, please speak to your insurance carrier or agent about the options available to you.  They will customize according to your insurance needs.