I had a fun phone conversation last week with a social media solopreneur about business insurance. Ruby’s business has grown, the clients are getting larger, and she wanted to get a handle on the business insurance she should be considering for her growing enterprise. I believe our discussion provides a great framework for solopreneurs and small business owners contemplating their business insurance needs.
General Liability (or GL) insurance protects your company in the event someone sues for negligence for reasons such as slipping and falling in your office or shop, a contract breach, or potentially issues with a product or service you provided. One of the things I determine is the location of the solopreneur’s office and whether they are meeting with clients or potential clients in their office.
- Home office where no clients or prospective clients visit may not need general liability depending on the work or service provided. General contractors and trades should carry GL regardless of where they office.
- Office or retail space whether traditional, co-located, or an executive suite usually necessitates carrying GL. Most property managers will require it. This even applies if you’re hosting a seminar or training in a rented space such as a hotel ballroom.
Common GL limits may be expressed as a single number ranging from $100,000 to $1,000,000 or more or as two numbers. The first number is the per occurrence limit and the second number is the aggregate limit. For most solopreneurs, a $1 million per occurrence and $2 million aggregate limit are sufficient.
Business Owner’s Policy or BOP, is usually a packaged policy which includes GL and other coverage such as:
- Business Personal Property (BPP) includes office furniture, phones, computers, office supplies, etc.
- Personal and Advertising Injury protects you if state something inaccurate in an advertisement, use a photograph not licensed to you, make an unsubstantiated claim, etc.
- Damage to Premises Rented to You covers you to repair any damage to rented space you or a client caused. If you rent an office or retail space, you need this included.
- Products and Completed Operations applies if you are selling products as a part of your business including reselling third party products such as appliances you install, computer and networking equipment, etc.
- Medical Coverage to help pay for initial care for a non-employee injured on your premises.
- Hired and Non-Owned Auto is an option which should be added if you rent a car while on a trip and take a client or prospective client out for lunch, dinner, etc. It even protects you if you send a limo or chauffeured driver to pick someone up.
Not all BOP policies contain all the above coverage so determine what you need and then confirm whether it’s included.
Professional Liability or Errors and Omissions (E&O) insurance protects solopreneurs who provide a service for a fee. E&O insurance provides coverage for judgments, settlements, and defense costs if the business owner is sued for delivering or failing to deliver a service that meets the expectations of a client. I recommend E&O coverage for consultants, wedding planners, freight forwarders, software developers, web designers, web hosting companies, photographers, advertising agencies, public relations professionals, commercial printers, social media firms, and many more.
Many solopreneurs don’t carry business insurance thinking they don’t need it, it cost too much, or they’ll avoid mistakes. Depending on what you do, if you’ve had prior losses, have employees, your annual revenue, and the amount of property your business owns, rates can range from a few hundred dollars to a few thousand. That’s not a lot to pay if something goes wrong!
What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you! And if you need help with your social media, check out www.socialsuccessmarketing.com or connect with Ruby on Twitter, @SocialSMktg!