Business General Liability Insurance
General liability insurance is the first major layer of protection for claims of bodily injury or property damage against your business.
This type of insurance is important because personal insurance will not cover a liability situation that may arise from a business activity.
“Many home-based entrepreneurs incorrectly assume their business assets are covered by personal insurance policies,” says Monica Lindeen, Montana’s Commissioner of Securities and Insurance. “Unfortunately, business owners often don’t discover this mistake until after a major incident puts their business and personal finances at risk. When it comes to insurance, what you don’t know definitely can hurt you.”
Types of business insurance
Here’s a breakdown from the National Association of Insurance Commissioners about what types of insurance your business may need.
Home. Seldom are homeowners or renters insurance policies designed to cover the specific needs of a home-based business. Most individual policies limit coverage for business property losses or damages to $2,500 in the home and $250 away from home.
However, these policies may leave out business-related liability claims from persons injured on your property, and provide no protection to keep your business afloat during a disruption stemming from a property loss.
Auto. Auto insurance policies tend to offer similar coverage. But that only applies to personal polices. Insurers see commercial activity as something very different where automobiles are involved. Normally, commercial vehicle insurance carries higher liability limits, and includes provisions for rented, leased and other non-owned vehicles.
This also can include cars owned by your employees. Be sure with a commercial auto policy that your business name is listed as the principal insured.
Life. It isn’t surprising that home-based businesses often cease to exist once the proprietor dies. That means life insurance is most often viewed as a personal, non-business concern. This approach may present significant risks if your home-based business is a partnership. One way to help secure the future of a business is Key Person life insurance.
This type of policy names each owner in the business as beneficiary on the other’s policy. If one owner dies, the other can use the life insurance payout to buy out the deceased partner’s heirs, pay off outstanding loans or other obligations, or continue operations until a replacement can be found.
Health. For small, home-based businesses, finding affordable health insurance for you and any employees can be challenging. Just remember that without health insurance one catastrophic event could destroy a business you spent decades to build. Home-based businesses have a variety of sources for purchasing health polices at group rates.
Plus, under the Affordable Care Act (ACA) — also known as Obamacare — business owners and the self-employed who purchase coverage through new health care marketplaces may qualify for premium tax credits and subsidies. Failure to purchase appropriate health insurance could result in a tax penalty you will pay when you fill your income taxes.
5 shopping tips for business insurance
Now that you better understand what types of insurance your business may need, use these five helpful tips from netQuote to keep the cost of business liability insurance coverage from blowing your budget.
1. Shop online for business general liability insurance
Depending on your type of business there may be several general liability insurance companies interested in writing your coverage. Obtain business insurance quotes from at least three different companies.
Submit the same information to each and request the same policy limits from each this approach will give you a straightforward “apples-to-apples” comparison).
2. Ask your personal insurer if they offer business policies
A multiple-policy discount can provide significant savings. An insurance company with which you currently do business i.e. business auto, umbrella, property, etc.) is a good place to look for discounts on general liability insurance.
3. Find out if your professional group or trade assocation can help
Members of professional and trade associations and other business groups may have access to discounts on general liability insurance provided by an endorsed company. Consider which groups your business may be eligible for and the insurance savings that may be available if you join.
4. Keep your business losses down
The best way for every type of business to save on general liability insurance is to maintain a favorable loss history –this means filing few or no claims. Ask if the general liability insurance company provides loss-control services. This service may be valuable in identifying areas of your premises or operations likely to cause a liability claim. Some companies may offer a discount for using the loss-control service.
5. Consider a deductible for your general liability policy
While deductibles are customary in most types of insurance, general liability insurance is an exception. However, many general liability insurance companies will offer a deductible if requested. A deductible can save you money on your premium in return for your willingness to take on a portion of the loss payment.
Editor’s Note: This is an updated version of an article originally published on Dec. 31, 2013.