During the COVID epidemic, home-based businesses surged. Some were “side hustles” that supplemented income. Others became the primary source of income for their owners. In the excitement, many new proprietors neglected a crucial protective mechanism: the right insurance. The statistics are worrisome: 75 percent of all businesses are underinsured and 40 percent of small businesses carry no insurance at all.
“Insurance is an organized way to manage risks,” cautions Kevin Sullivan, President of Paul Davis of Northern Virginia. “Insurance replaces the potentially devastating, unplanned cost of an adverse event with a smaller, predictable expense. The latter are far easier to budget and better protect the business you worked so hard to build.”
Why don’t new owners consider business insurance? Many believe homeowners insurance will cover these risks. In reality, homeowners insurance typically and explicitly excludes coverage for business risks or losses. Other new proprietors neglect insurance in the intense cascade of immediate responsibilities that accompany a new business, from advertising and shipping to hiring and managing employees.
Insurance experts recommend that home-based businesses consider seven key types of policies:
- Business Property: Covers on-site equipment such as electronics, furniture, storage units and anything that you use to conduct your business.
- Liability: Covers damages caused to another person or property as they do business with your company. This is necessary if anyone comes to your house as part of the business, whether customers, consultants, colleagues, construction professionals, inspectors and more.
- Professional Liability: Covers negligence, inadequacy or failure to deliver your company’s products or services.
- Product Liability: Covers damages to a person or property caused by your products.
- Business Automobile: Covers accidents and damages related to vehicles used for business purposes – which personal auto policies often do not cover.
- Workers Compensation: Covers medical treatment, disability and death benefits if an employee is injured or dies while working for your business. While it’s tempting to conclude that your employees’ tasks are not dangerous, statistics show that simple slip, trip and fall accidents are the most common type of work-related injury.
- Business Interruption: Covers lost income in case of disaster or catastrophic events.
Confused by the many choices? Insurance carriers will consult at no charge to advise which types of coverage apply to your specific business type. “When you choose an insurance carrier, you’re also partnering with someone who wants your business to thrive,” Sullivan concludes. “We know first-hand – since we work with most major insurance companies – that carriers can truly rescue businesses when things go wrong.”
Would you like information about how Paul Davis can help rescue your business in case of disaster? Visit www.pauldavis.ca to learn more.