You Cannot Afford to Do Business Without Insurance
Strictly speaking, unless you have employees working on a payroll, your business is probably not legally required to carry insurance. And according to the Insurance Information Institute, about 40 percent of small business owners operate without insurance.
What are they thinking!?
As a solopreneur, the fact is that you can’t afford not to carry some form of insurance…
As you might expect, the majority of uninsured small business owners claim that they are cash constrained. They say, “If I could afford insurance, I’d run right out and snap up a full package—General liability, business owner’s, property, commercial auto, the works!”
The fact is, as a self-employed solopreneur, you can’t afford not to carry some insurance. Protecting your business investment with adequate insurance is an essential part of business ownership. Now that you are flying solo, you need to do everything you can to shield your business and your reputation from the risks associated with unexpected events, legal liabilities, and losses.
Without sufficient insurance, a fire, theft, accident, or lawsuit could potentially destroy your business and consume your personal assets, including your home. What’s more, if an accident or unforeseen event ruins your credit or undermines your reputation, then you might have a hard time building a new business in the future. You could be out of the game for good.
Still think you can afford to run your business without insurance?
Finding Solid Information In a Sea of Advertising
Most of the information published in the public domain comes from insurance companies and brokers. Providers and agents see insurance as a product (it’s their business after all), and it’s their job to push that product to the best of their ability.
So it’s no surprise that many solopreneurs and small business owners find the business insurance maze difficult to navigate—you can't make an informed decision without reliable, objective information.
Let’s start at the beginning. Only some businesses are legally required to carry insurance. For example, if you have employees, then your state probably mandates that you carry worker’s compensation insurance. Some state governments require individuals applying for a business license to carry insurance.
Additionally, you might be contractually obligated by your business partners (such as a landlord or a vendor) to purchase certain types of insurance.
Beyond that, you are on your own. Many business owners believe that if they structure their business as an LLC or corporation, then they are fully protected from liability—but this is absolutely not true. General liability insurance is the only reliable way to protect yourself from the legal and financial hassles associated with accidents, injuries, and claims of negligence.
A Few Other Common Kinds of Business Insurance to Consider
Property Insurance: Any piece of property or equipment—computers, tools, inventory—can be insured. You might also want to consider business interruption insurance to protect you from an unforeseen event that results in a loss of income.
Professional Liability Insurance: Also known as Errors and Omissions Insurance, PLI protects you against claims of malpractice and negligence. Some professionals (i.e. doctors) are required to carry PLI, but for most solopreneurs, this will be optional.
Home-Based Business Insurance: Your homeowner’s insurance policy probably does not cover business losses. You might be able to purchase property damage riders to cover business equipment in your home, but you will want to supplement this with general liability insurance.
A business owner policy (BOP) package often includes all the basic insurance that a solopreneur needs, including interruption insurance, property, vehicle, liability, and crime. Typically, business owners save money by choosing BOPs because providers bundle services and plans in order to reduce the overall cost of coverage.
Health Insurance: The most important type of all. How do you choose? What are you options? The good news is that our pals at EHealthInsurance make shopping for an affordable, understandable, valuable policy quick and easy. Check it out.
As you can see, insurance is anything but a luxury. So what are you waiting for? Get out there and find the coverage you need to protect your investment.
Know something about insurance that every self-employed business person ought to know about? Leave us a comment in the space below.