Do I Really Need Business Insurance?


Protect Your Solo Business

So you are a business owner and instead of working in an office or store front space, you work from home. There are lots of benefits to running a home-based business, as I'm sure you know.

Did you also know that being a solopreneur has unique risks?

We don't like to think about that, but how will you protect yourself? Have you thought about business insurance? Not just if you need it, because you probably do, but what kinds of insurance do you need, and how much should you get.

Let’s see if I can help.

Owning a business of any kind is sort of like having a target on your back.

For example, let’s assume you were in a small auto accident. Someone rear ended you and caused some damage to your car. You probably would not get an attorney and sue the other driver because it was just a small fender bender and you didn’t really get hurt.But what if the vehicle that hit you was a UPS Truck?

Cha Ching $$, right?

That example is a little extreme, but you get the point. People see companies as having bigger pockets, so they are more likely to go after them for money if they get hurt.

If you make and sell or re-sell a product, offer a service or advise others as a consultant, you are exposed and should consider getting insurance. One business that is exceptionally risky is any kind of contractor that performs a trade (construction, electrical, plumbing, painting, etc).

Here is an example of just how important insurance can be:

There is a local painting general contractor named Ken. Ken prices and bids on painting jobs and when he wins a job, he hires a sub-contractor to complete the job. Ken doesn’t carry insurance because he makes his sub-contractors carry insurance. He thinks this is enough coverage.

One day his sub has a crew of guys working on a rather large house. One of the crew is up on the roof painting part of the chimney. That crew member has an accident and falls off the roof. He is badly hurt and ends up in the hospital with broken vertebrae in his back.

That injured crew member is now unable to work and earn a living to support his family so he gets an attorney. The attorney finds out that the sub has recently missed a payment on his insurance policy and the policy was cancelled. Now, instead of being a claim on the subs policy, the attorney is suing the sub-contractor directly, Ken the general contractor and the Homeowner in order to help take care of his client.

The lesson here is that it isn’t just your own company that you need to worry about. Make sure you are covered and that any other company you are involved with is also covered. There are ways to ensure these other companies have proper insurance, which I'll discuss in future posts.

The key to making sure you have the proper business insurance is to find an agent you trust. Your agent should act as an advisor, asking questions about you and your business so they can recommend the best policy to properly protect you.

Next month I'll discuss several different types of policies available for businesses, and the kinds of things that they cover.

Photo by Scott Liddell on

Micheal Duba is an insurance expert and a licensed Agent with American Family Insurance. He specializes in Property, Casualty, and Life insurance, and is an active leader in the local business community.

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