Small-business owners wear many hats – too many to count really. Oftentimes one person serves as the CEO, CFO and HR manager, while also handling the sales and marketing functions. This list just begins to scratch the surface. With so much going on, and so many irons in the fire, insurance often gets overlooked. Then, when the business owner decides they need it, there is so much information to consider that it’s difficult to determine exactly which policies best fit the needs of the organization.
With over 20 years in the commercial insurance business, I’ve heard the full laundry list of reasons why a business owner thinks they need a certain type of insurance or why they’re sure they don’t need another. The truth is there are a lot of myths out there. Here are three I commonly hear, along with an extra tip just for good measure:
- “I am the sole employee of my company, so I don’t need workmans’ compensation.”
Wrong. If you are injured while on business, a workers’ comp policy will help protect you and pay your medical expenses. Let’s say, for example, you get in a car accident on your way to meet a client. You are injured. Yes, your personal medical coverage will kick in, but having workman’s comp will lighten the burden on your personal insurance and may offer additional coverage or pay.
- “I work from home, so my computer and other equipment is covered in my homeowner’s policy.”
Wrong. If your equipment was purchased through the business, and documented as such, your homeowner’s policy will not cover it. Let’s say you work in a basement office, and an upstairs pipe bursts. Your computer and printer are ruined, as well as your office furniture. Your homeowner’s policy will likely not cover replacement of these items if they were originally purchased by the business. A general business insurance policy would pay to replace the destroyed equipment.
- “I’m a consultant. I don’t need Errors and Omissions insurance coverage.”
Wrong. Even if you only provide advice, you could still be sued if that advice does not bring desired results. If you are a marketing or technology consultant for example, and set a client’s expectations too high, that client may turn around and file suit when the expectations are not realized. An Errors and Omissions policy will help with your attorney fees even if the lawsuit turns out to be frivolous. Without such a policy, you may have to dig deep into your personal funds to pay an attorney, court fees, fines, etc.
Those are three things to consider as you embark on selecting your commercial insurance coverage. Now, my extra tip – Auto Insurance. Even if your business does not own any vehicles, your business could still be held liable. If you are driving your personal auto and are involved in an accident seriously injuring someone, your personal auto insurance is first in the line of coverage. However, the other guy is always going to come after deep pockets, and they will likely assume that your company has those deeper pockets. Your business needs non-owned auto liability. First your personal insurance will pay, then, the non-owned business auto kicks in if the claim is very large. Think about these things as you review your commercial insurance policies.