Buying Commercial Liability Insurance


Commercial Liability Insurance protects businesses from lawsuits. Whether your company is a large or small business, even if you’re an independent contractor working by yourself, you need to consider buying liability insurance to protect your assets.

Commercial liability insurance comes in many forms, and General Liability Insurance is usually the first type of policy most businesses shop for. It may not be the only business policy you’ll need to buy, but it is an important policy to consider. It can save your company from major financial losses if you lose or have to settle a property damage lawsuit or personal injury claim. Even if you’re found not liable, legal defense fees can be costly, and this policy will cover those costs as well.

Other types of commercial insurance policies you’ll learn about at this blog are usually purchased along with GLI and they include Professional Liability Insurance, Errors and Omissions coverage, worker’s compensation, product liability insurance, commercial building insurance for property owners and a few more specialty products.

You can start the process of buying a general liability policy from an insurance agent or broker, or you can get quotes online. In the process, the insurance company usually will offer you other related policies you may need for your particular business. Before you purchase a policy though, we recommend you pay close attention to these three important aspects of any business policy:

1. Limits
The limits of general liability policies refer to the maximum amount the insurance company will pay out on a claim. It’s important to get the right amount of coverage for your business based on it’s specific risks. If you buy a policy with a $1 Million limit and you lose a suit for $1.2 Million, you’d be responsible for paying the other $200,000. That would bankrupt many small businesses.

Businesses with risk beyond their policy limits should consider an umbrella policy which is usually a cost effective way to cover additional risk. The best way to determine how much risk your business has is to sit down with an insurance broker.

2. Exclusions
Exclusions in liability insurance policies are simply things that are not covered. Obviously, it is important to find out if your policy has any exclusions before you purchase. Some examples to be on the lookout for include things such as intentional injury, acts of war, and breach of contract. Many times, additional policies can protect you from things not included in your general liability insurance.

3. Deductibles
Deductibles are the part of any claim that you pay out of pocket before the insurance company starts paying. Most general liability insurance policies have no deductible, but if you are a small business with minimal risk, you can cut the cost of your insurance by requesting a deductible. Just be sure it is an amount you can easily pay in the event of a claim.

How Much Do General Liability Insurance Premiums Cost?

Business insurance rates have been on the rise as of late, perhaps due to the number of lawsuits brought against companies. Unfortunately, many individuals have the perception that all businesses have deep pockets, but as a small business owner you know otherwise. That’s why it is so important to protect yourself with liability insurance.

General liability insurance can cost anywhere from a few hundred dollars a month to thousands of dollars a month. It all depends on the risks associated with your business, including your business location and your history of claims. As you add in other policies such as E&O, commercial vehicle coverage, worker’s comp, etc. your premiums will rise. But again, you may not need all the extra coverage, depending on the size and location of your business, your annual sales volume and a few other factors.

The cheapest way to buy commercial insurance is to get quotes online and cut out the middle man. Many sites offer multiple quotes, and you can even go to many of the big name insurers directly. While price shopping is wise, before you sign any policy it is also a good idea to get in touch with an agent or broker to make sure all your risks will be covered. When comparing policies keep those three important aspects above in mind, and you’ll be able to adequately protect your business with all the right commercial insurance coverage you need.

Is Low Cost General Liability Insurance Really Available To Small Businesses?

If you are a small business in search of low cost general liability insurance you may be frustrated when trying to find a good, cheap policy. But there are low premiums available if you look hard enough.

Exactly how much should you pay for good commercial liability insurance? Well, that all depends.

I’ve heard of independent contractors getting policies for as little as $750 a year which in my opinion is a deeply discounted premium. Chances are, you’ll pay more than that for good liability coverage. It all depends on where your business is located and the risks involved.

You see, there are risks associated with the area you operate, and that factors into your premiums. If you’re in a high crime area, you’ll pay a lot more for insurance. After all, the more claims that are made in certain areas like urban development areas, the more contractors will pay for insurance in that area. I’ve heard of contractors paying 5-7 times as much as other businesses, simply because of the areas they do business.

The other big factor is your business itself. What exactly do you do? What services do you offer clients. What liabilities or risks are associate with the work you perform for clients or even the advice you give them. The total cost of your business insurance premiums will be directly related to this factor simply because every type of business has a diverse risk connected with it.

So now that you know how underwriters calculate rates, how do you get the best rates in your business? Well, first you need to contact an insurance broker or agent to share as much about your business as possible. Good agents work with multiple insurance companies so they can basically shop around for you, saving you time. And time is money, so let them go to work for you.

General liability insurance provides protection from losses due to liability lawsuits, and good protection is invaluable to your business so get a good rate, but don’t be cheap. Make sure you get enough coverage to handle your liabilities, even if it costs you an few hundred extra dollars a year. A good policy will not only cover liabilities, it will pay for attorney fees, investigation charges, and other legal expenses.

Without commercial insurance you’ll constantly have to worry about accidents and things out of your control. So get some quotes for your business before you see an unwanted claim files against you.

Small Business Insurance: Agent, Broker or Online Quotes?

Most small businesses when first starting out, have no idea that there’s a difference between working with insurance agents, using a broker, or getting quotes online. But there is a difference.

Both agents and brokers match commercial liability insurance policies with individuals and businesses. Online quote sites streamline the process, sometimes by cutting out the middle-man altogether, or by matching you with a local agent or broker.

All three choices can result in you getting all the coverage your business needs, including general liability insurance, professional liability insurance, E&O, etc. But which strategy is the best choice for your small business?

First let’s look at the differences, then you can decide for yourself which is a better choice for protecting your business properly.

An insurance agent in the U.S. is primarily a sales representative for an insurance company or for multiple insurance companies. They work for the insurance company, not for the insurance buyer. When working with an agent they are responsible for getting your paperwork done correctly. But it is your responsibility to make sure you’re buying the right coverage for your business. There are many different levels of agents. While most are well-informed on commercial liability and other policies your company may require, some not so versed in specific business needs. That’s why many firms go with the next choice, a broker, when buying their coverage.

An insurance broker is a little different than an agent. In the U.S., insurance brokers need to be licensed. Rather than working for the insurance companies, they represent you. I’m not saying that agents are not working in your best interest, because in most cases the are. But a broker will thoroughly analyze your business in detail and they are responsible for putting together a comprehensive plan to protect all facets of your commercial enterprise. For this you may end up paying a bit higher premiums or commission, but the extra security it provides your business may be worth it.

But what about online insurance quote sites? With the rising cost of business related policies, small businesses need to save money wherever they can. So if your business is very small with few or no employees, and your liabilities are limited in scope, you may want to cut the middle man out altogether, and get insurance quotes online.

There are many sites that now let you get multiple quotes from different insurance companies simply by filling out one form. You can also get business insurance quotes directly from many major insurance companies now. How much will you save by doing this? Some say you can save as much as 15% or more. That can turn out to be a significant savings depending on your business needs, and really small businesses can do a lot with that extra money.

Again, the decision to use an agent, a broker or shopping online for coverage, comes down to your particular business. Businesses with significant liability risks, property, employees, vehicles, etc., are likely better off with a broker, as the savings factor is probably outweighed by the added protection a broker can offer. However if you’re a very small business with minimal risks, working with an agent or an online quote site may be your best choice, especially if you’re willing to do a little research into what your specific needs and requirements are before shopping for your business insurance.

Commercial Liability Insurance Coverage Options

Commercial liability insurance is one of the first business insurance policies you’ll need to make decisions on when you start a new small business.

When buying commercial liability insurance you’ll need to decide on many different coverage options. That’s why it’s important to get educated concerning insurance before your company opens for business. Safeguarding your business and private assets is of utmost importance.

The first option is coverage amounts. Having enough coverage is essential for a business because if you don’t, your business must absorb the loss from being under-insured. In the case of a judgement or settlement against your business that exceeds your policy limits, you could find yourself out of business and might even jeopardize your personal assets.

Insurance providers use underwriting standards to determine whether you are eligible and for how much coverage. Insurance firms have categories for commercial insurance and your business rates will be determined in part by the category your business falls under. For this reason, even if you company has a clean history you may still pay a high premium for your business insurance.

Commercial liability insurance policies typically have specific dollar limits on claims so be sure you choose a policy that matches your potential liability. If your business has higher than average risks you should carry more coverage. If for instance you own a window washing company in New York city and your workers are on scaffolds hundreds of feet in the air, even a one million dollar limit policy may not be enough. After all, imagine the worst case scenario and whether life or limb could be at risk – not only your employees, but innocent bystanders as well. I’m sure you could imagine a lawsuit judgement or settlement in this case going well over $1 Million dollars or even $5 Million dollars for that matter.

If your business demands higher insurance policy limits than the usual liability insurance policy can offer, ask your insurance agent about an umbrella policy. Umbrella policies, or excess liability coverage can provide greater limits on policies such as general liability, employer’s liability and are an affordable way to get higher policy limits on some small business insurance policies. But note that umbrella liability insurance does not extend the coverage limits on an errors and omissions (E&O) insurance or professional liability policies. A licensed professional can explain this option to you before you take out a policy, so find a general business insurance broker to help you navigate the tricky field of commercial liability insurance.

When buying insurance for your business, it is important that you do your homework. You can research complaints against any insurer you plan to give your business to before you sign any policy. This can be done at your state’s official website. Every state in the U.S. has an insurance department that offers this consumer information. You can also do searches on specific insurers at the National Association of Insurance Commissioners website or NAIC for short.

When choosing commercial liability insurance you should get more than one estimate for monthly or annual premiums. Don’t just go with the cheapest quote you get. Make sure your business will be well protected in any scenario possible. The lowest priced insurance quote more than likely will not give you the best protection. A solid company with a good track record of paying claims in full and on time will be worth far more to you than cheap premiums.

General Liability Insurance – Buying It For Less

General liability insurance is a component that tends to be forgotten by many new businesses. The business owner could be busy trying to set up or perhaps looking for funding and the required permits needed, and small company insurance often takes a back step.

The fact is, general liability insurance is essential for many businesses, both big and small. When you’re starting a brand new company there are many risks concerned. If something unexpected happens, insurance gives you a chance to protect yourself from liability. If you think liability insurance is just for contractors you are mistaken. Other businesses need to be covered as well, including professions such as engineers, architects, plumbers, designers, painters, and the list goes on and on. Any business where you could have potential liability, needs to carefully consider getting a policy.

While searching for general liability insurance, the first step is always to belong to a credible connection such as a trade association or your local Chamber of Commerce. Buying insurance can be expensive for many businesses and these organizations allow members to buy at group rates. Look for other organizations that offer insurance rates for businesses your size.

A small business should always be on the lookout for a package deal. Purchasing different bargains from different insurers can easily increase the monthly premiums. A small business needs to look into a number of things before acquiring liability insurance. Look to see what is required in your state or town, for your type of business. If you can get all the policies you need (maybe just one or two) from the same underwriter or insurance agent, then you can save a lot of money on annual premiums.

Some other types of commercial insurance you may need depending on the business you are operating could include…

Errors and also omissions coverage

Property insurance

Construction insurance

Employees compensation

Workers compensation

Professional indemnity insurance

Auto insurance

Health insurance

The business industry has many hidden risks. An experienced insurance broker will help in identifying these dangers.

When looking for a general liability insurance you need to make sure that you buy a policy that’s tailor-made for your specific enterprise. A good insurance company will show you how to buy a policy that is cost-effective and work-effective. Take time to research and ensure that they cover small businesses and have your best interests at heart.

Insurance Quote Sites Get You Multiple Quotes At Once

Many people shop for various insurance policies online and are always looking for the best deal possible. This applies to both personal insurance such as home, auto and life, as well as commercial insurance for businesses.

People are always looking to get the lowest premiums possible in order to save money, especially when it comes to business insurance such as general or professional liability insurance. Getting multiple quotes will give you an idea of what you will need to pay each month and a variety of options to choose from. By having lots of options you will be able to find a policy that is most affordable for you.

One of the best sources of getting insurance quotes is using a multi-quote site online. This allows you access to multiple insurance companies are once.

When using various quote sites, there are many ways in which site get you multiple quotes. The first way a website gets you multiple insurance quotes is by giving you a listing of companies and insurance premiums for the coverage you’re looking for. Many sites will often have by default a list of insurance companies and premiums that you are able to get. In this process you will type in the type of insurance you’re looking for and then once you click on the site link you will get the appropriate listing.

Another way in which insurance quote sites get you multiple quotes is by allowing you to choose whatever options you are interested in. On the site you will be able to choose the type of policy you want from a drop-down menu, choose the particular features and types of coverage you want, such as BOP (Business Owners Policy), GLI (General Liability), E&O (Errors and Omissions), etc. Then you enter information about your business and a listing will then appear that has a list of all the quotes available to you.

Commercial insurance quote sites provide multiple quotes also by using data such as a zip code and company information. When you choose the type of insurance you are looking for, the site will ask where you live and based on the zip code they will get you a listing of local quotes. You may be required to enter gross sales figures of your company so they have an idea of the volume you do and number of clients you deal with annually. Since many insurance premiums depend on your geographic location, the sites will list multiple quotes by gathering your zip code and place of business. Keep in mind, many times those price quotes are not set in stone, as each business has specific needs and may choose more protection in the way of lower deductibles, less exclusions and higher coverage limits.

Getting multiple insurance coverage quotes is important if you want to save money. Having the proper commercial insurance policies in place will allow you to reduce risk and save money in case something negative occurs. Since there are many insurance companies that offer policies to businesses, large and small, shopping around and comparing premium costs is a wise decision.

Saving On Business Liability Insurance Through RRG’s

A Risk Retention Group is an insurance company in which each policy holder is also a effectively stock holder. An RRG is usually formed to address the needs of a specific business related group or niche and the group is permitted to write liability insurance only.

Any individual who chooses to be insured through a Risk Retention Group possesses partial ownership of the insurance company, in other words, the members of the RRG collectively invest in a fund to be utilized only for liability issues.

One major difference between a Risk Retention Group and the average insurance company is that it is formed under federal law, whereas otherwise insurance companies are formed under state law. Specifically, risk retention groups (RRGs) exist under the Federal Liability Risk Retention Act of 1986.

Risk Retention Groups do not cover first party coverages like property, workers’ compensation or personal lines. As the name implies, these groups do not buy commercial insurance policies, but “retain” the risk within the group. Members of an RRG can write liability insurance for all or any portion of the group members exposures.

What is effectively happening in an RRG is that the members of the group are insuring each other against liability claims and lawsuits. However, because a risk retention group is technically considered an insurer, it may purchase reinsurance. Reinsurance is a form of insurance that companies buy to cede part of their risk or spread losses over multiple years.

One major advantage of RRG’s is that it is not necessary to fulfill multiple filing and licensing requirements for multiple state. A risk retention group must simply be licensed as an insurance company in its home state. RRG’s can also provide stability in members’ fees, such as coverage costs and rates. Examples of some well-known Risk Retention Groups include Evergreen USA RRG, GovTech and Global Hawk Insurance.

One of the most appealing benefits of Risk Retention Groups in comparison to standard insurance coverage is how much cheaper it is for the company. The savings are evident in a multitude of ways. First of all, members of RRGs save inherently simply because all employees are pooling together, in resources and in sheer numbers. RRGs are also not affected by frequent changes in the outside insurance market. Some RRGs even allow premiums that have gone unused to roll over for investing in, and thereby decreasing the cost of, future premiums.

Statistics show that the affordability of RRGs is steadily growing. In 2004, the average return on equity for RRGs was 5.5%. In 2008, RRGs average return on equity had reached a climbing 13.4 (This is according to a United States Government Accountability Office report on Risk Retention Groups and the Risk Retention Act from December 2011.) There are also no fronting costs, which benefits all members of the Risk Retention Group.

In today’s recessionary economic environment, Risk Retention Groups are an innovative and affordable option for individuals who want the stability of liability coverage without the exorbitant fees of standard insurance. To find RRG’s that serve businesses in your particular niche, start by searching the Internet for RRG + your niche, or contact your insurance broker, agent or financial services advisor.

How Much Does Professional Liability Insurance Cost?

Professional liability insurance has become a necessity for just about every trained or skilled professional in 2012, now that lawsuits against businesses are so prevalent. Whether you are an independent contractor or work for a company, you need to consider your risks. But how much should you expect to pay for a policy with enough protection for your particular profession?

Well, that all depends on what profession you’re in.

You see, not only do professional liability insurance premiums depend on factors such as how much you earn and what types of clients you work with, they vary widely depending on what field you are in. That’s because above all other factors, it is the profession that you are in that determines the amount of risk you have.

Let’s look at a few examples. Professional liability insurance premiums for a profession such as a teacher for example, can be as low as $15 a month. That’s because a teacher can get a membership in an association such as the AAE which includes $2,000,000 in professional liability insurance for that low monthly membership fee.

However if you are in a profession such as say, architecture, you could end up paying thousands of dollars per year for a policy. Obviously, an architect has a higher risk that a teacher and that’s why the premiums will be higher.

Additionally, PLI premiums (also referred to as indemnity insurance) will vary even more if you’ve ever had claims filed against you or your company in the past.

Just as with any other type of insurance your premiums are based on risk and therefore all factors are usually considered by an insurance company before they tell you how much your premiums will be. Of course, deductible amounts are also a factor in determining how much your monthly premiums will be. 

Other risk factors that will affect the cost of your professional liability insurance premiums will be things such as the amount of experience you have, the types of clients that you deal with, the field that you work in, and the service that your provide for your clients. These factors together will help to determine that amount of risk that your company has of being sued. 

Of course, just as with any other type of insurance there are ways that you can save money on your professional liability insurance. For starters, you can and should join any organization that is specific to your field if they include liability insurance for their members. Next, purchase only the coverage that you really need. While most insurance agents are very honest remember, they do work on commission and some will try and up-sell you additional items that you may not need, or that you already have with another commercial policy. While you do need to make sure you have a policy with high enough limits to cover your particular personal and business liabilities, avoiding over-coverage or duplicate coverage will help you keep your premiums affordable.

All in all you need to make sure that you don’t cut corners when it comes to your professional liability insurance. While this type of insurance is not cheap it is a necessity for all who are doing business in today’s sue happy climate. Shop around offline and online, and compare rates from one company to the next, keeping limits and exclusions in mind. Then check out the insurer with your state to make sure they have a good track record of paying claims, and a low number of complaints against them.

General Liability Class Codes Affect Your GLI Cost

General liability class codes affect all types of business, and it is essential for a company to understand how these influence their insurance rates. Insurance providers rely on a number of things when they determine the cost for their commercial policies. One of these components that factors into pricing is class codes. 

The insurance industry has developed class codes to help them determine how much they should charge for a liability policy. This is a way that they can determine the likelihood that they will be responsible for making a payment on behalf of the company they cover. They do this by rating companies according to the type of work they do on a daily basis. Some companies are more liable to incur damages during their daily work than others, and these codes help them rank and classify firms according to risk. Higher risk equals higher premiums, lower risk equals lower premiums.

Payroll and monthly income are also chief considerations that are used by insurers to determine the class codes of a particular company. They help an insurance company to see how much business a firm is doing and the likelihood that damages will need to be paid. In a nutshell, companies that do more volume of business have higher exposure to risk simply because of the number of clients they deal with over the course of a year. It stands to reason then that lower volume businesses will generally have less risk and therefore lower premiums.

Class codes have been developed for most types of business, and they are often highly specialized. Construction, for example, is broken down into many subcategories, and these may include commercial or residential companies and the type of projects they are involved in. Manufacturing firms are also classified strictly according to the particular goods that are made, and this affects the codes that will be applied to an organization.  Restaurants have class codes and different types of restaurants are broken down further to pinpoint risk. For instance, a restaurant with a full bar that is open late will have more risk than a deli that serves breakfast and lunch only, and has no liquor license.

The bottom line is, class codes will affect the rates that a company has to pay for their general liability insurance policies. General liability insurance is a requirement for most companies to pay the costs of any damages from claims that include property and personal injury. There are thousands of categories that are used to specify the likelihood that a business will be liable to cause injuries and damages. Insurers rely on historical data to ensure their class codes are accurate and predict the likelihood of incidents. Insurance companies also rely on the size of a company when they apply class codes to their clients.

A great way to save money on your commercial insurance premiums is to check with your agent or broker to verify that your business is in the correct class code. All businesses change over time and yours could drift into a code that has more or hopefully less liability which can save you money on your general liability insurance policy.

Tips For Reducing Your Business Insurance Premiums In 2012

Reducing the cost of business insurance premiums can result in a big savings for companies. The following are some tips to help organize and lower your commercial insurance premiums effectively.

1. Gather all relevant business insurance policies. Ensure that they are the most recent copies, as insurance companies send updates from time to time that change terms and conditions. Make a file for these papers if one does not exist. Ensure that all copies of any claims that have been made are in the file. Place an extra copy in an off-site location. It is also a great safeguard to scan and save the papers digitally in order to have access to them from anywhere. Try using an online backup service for extra protection.

2. Review your “schedules”, or lists of covered equipment and locations. Begin by taking a look at equipment and comparing it to what is covered in the policies. Make a note of any discrepancies so that they may be corrected. Ensure that the business owns all of the vehicles, office equipment, furniture and other items listed. Make an updated list to revise if necessary that includes items to remove from the policy. Next, compare all named insureds to ensure that they are listed correctly.

3. Check for unnecessary or repetitive insurance coverage. All companies, from small businesses to large corporations, and even independent contractors change over time. When the business changes, the commercial liability insurance coverage needed most often changes as well. Adjusting business insurance policies down accordingly to what is actually required can provide a big savings. For instance, when the company outsources or downsizes, certain coverages can be eliminated completely in some cases.

4. Ensure that all your worker and employee classifications are correct. Businesses can find a significant amount of savings when their workforce is classified correctly by a workers’ compensation and liability insurer. Review the policies with a professional insurance broker or agent to ensure that premiums are based upon the exact kind of workers that the business uses. For example, sales workers who are classified as line workers will cost more than they should, because of the increased risk. Take the time to classify all of the company workers to get the best savings on insurance premiums.

5. Have your insurance broker shop around and compare similar policies with other insurance companies. In fact, you should annually discuss your business insurance needs with an insurance broker. Insurance professionals are often aware of the best ways to save, so use their guidance to help make the best decisions. Also inform your present insurance company that an insurance evaluation is taking place to reduce business insurance costs. Often, they can assist in adjusting rates to a more logical premium for the company. Review all of the details of the business with the insurance agent so that he or she can suggest ways to reduce insurance costs. Usually, insurance professionals learn about new circumstances about the business that can result in significantly lowered insurance premiums.

Evaluating your commercial insurance needs and reducing premiums is something that all businesses should do annually. It’s something that will affect your bottom line in a big way, and a place where many companies can save substantially.

Should You Buy Business Interruption Insurance?

Business Interruption Insurance is a necessity for many businesses, even though many small business owners are not aware this type of coverage is even available. With the recent rise in natural disasters all across the United States and elsewhere, businesses of all sizes can benefit from this kind of insurance.

When a disaster strikes your business you will rely on your commercial insurance policies heavily. And if you have the right protection plan in place such as good commercial property coverage, your building and its contents will be covered. But what about things like your income and operating expenses while the business is recovering from the disaster? How will you pay for your ongoing expenses with little or no income coming in?

This is where a business interruption policy can help you out. With this type of policy your business insurance provider pays you for income loss plus for other expenses during a covered period of business interruption. Before you go out and buy this type of insurance, here’s exactly what it covers as well as a few other things you need to understand…

A typical business interruption policy will pay for loss of income, your fixed costs, relocation, and additional expenses. Here are some details on each of these aspects.

Income loss

Insurers measure your loss of income by looking at your previous earnings and project how much you would have made during the covered period. This income can be replaced by your insurer. 

Fixed costs

This pertains to the expenses that keep your business working such as rent or mortgage payments, utilities, etc. These costs are easily determied from previous payments made by your business.


It is sometimes necessary for your business to relocate while contractors repair damage. Temporary location coverage can be included in your business interruption policy so it will cover your move and relocation expenses.

Additional expenses

With any disaster there are always added expenses you may not have anticipated. Most insurers who sell business interruption policies will cover additional expenses so be sure to ask your agent or broker about this.
Business interruption insurance is a vital tool for many businesses. Without this kind of insurance many companies would be at risk of going bankrupt when disaster strikes. This kind of policy allows the businesses to continue their operation and stay in business. The emotional stress of business interruption is enough to deal with, and having a policy like this on your side can at least remove the financial stress. It may be enough to keep you from having to lay off valued employees or even save your business.

You can buy this type of policy from your business insurance carrier or buy direct online and you may be able to save a little more. To maximize your savings when buying insurance it’s a good idea to buy all your policies for your business from one commercial insurer. Most insurers will offer a package deal with General Liability Insurance, Professional Liability, Commercial Building Insurance and Business Interruption all for one discounted monthly premium. Compare rates from a handful of carriers to be sure you’re getting the best rate possible, with all the right limits you need for your company.

Home Business Insurance Options

Millions of people in the United States and other countries operate businesses from home, including consultants, contractors, web designers and hundreds of other professionals. If you’re one of these home based business operators, you need to be aware of some insurance related issues that could affect you.

Chances are, you have a homeowners policy to cover losses related to your home and the contents within your home. But when it comes to your home business, homeowners policies are extremely limited as to what they’ll cover. In fact, most homeowners policies cover a maximum of $2,500 in business related losses at home. This  includes all your work related supplies and inventory as well as machines, printers, PC’s, laptops and other work related equipment. In addition, business related claims will also likely be subject to deductibles, meaning you’ll be covered for far less than that amount.

Maybe you’re not worried about having to buy a new PC, printer or other equipment that may get damaged or stolen. If that’s the case, you still need to consider other situations that could leave you in a financial bind.

What sorts of liabilities would a home business operator be subject to?

Well for starters, if your customers come to your home for meetings or appointments, they could be injured entering your house by something as incidental as tripping on your steps. This could lead to a lawsuit, and you guessed it — the suit would likely not be covered by your homeowners policy. Perhaps someone delivering a package falls or has some other type of accident in your driveway? How you do cover yourself for situations like these that are business related in nature, but occur at your home since that’s where you’re doing business on a full or part-time basis?

There are a few ways to get covered for business related liabilities at home. The first solution is to consider a “combo policy” that covers the home as well as the business. Some insurance companies now offer these policies which combine different insurance policies. By combining homeowners and commercial insurance such as different types of liability coverage and even business interruption insurance if you require that, you can save money. Policies like this can also include business related claims that are generate when accidents happen away from home. Ask your insurance agent or broker about this type of policy if your business is operated from home. In fact, if you combine all your policies including auto, home, business and life with one insurer, you can save even more.

A second strategy is to simply get what is called a business “endorsement” added onto your homeowners policy. This is basically a rider that is attached to your homeowners policy that extends your coverage to your business. Depending on the insurance company you work with, your policy endorsement can cover things such as theft or damage to equipment, inventory and even GLI (general liability insurance) which covers you for business related injuries or property damage. If your home business qualifies for this type of policy it can help you save money on your commercial insurance by limiting occurrences of duplicate coverage.

When shopping for a home business combo policy or a business endorsement, be sure to ask about exclusions so you know what is NOT covered. Also, make sure your policy has high enough limits to cover all your potential home and home business liabilities. Too many people buy business insurance then find after an accident or lawsuit that they did not have a high enough limit. If your losses in a claim, settlement or judgment are $1 Million and your policy limits were set at $500,000, you’ll be responsible for coming up with the rest. What good is insurance at that point? One way to get higher coverage amounts is to buy an umbrella policy. This type of policy can increase your limits and save save you money in the process.

These types of policies do not cost much for most home business owners. In most cases for just a few hundred dollars a year you can add business coverage to your homeowners premiums, including general liability. You can do it for less if you shop around enough both online and offline.

While running a business from home seems easier than setting up a shop or office at another location, you are still subject to liabilities. The right insurance policies can help protect your finances, your home and your business.