Guest post:: Hannah Sullivan is the co-founder of Pogo, an online insurance agency that provides business insurance to the self-employed. She is a graphic/web designer turned insurance expert who loves people watching, eating popcorn, and going to bed early. Here, she writes about why moms should protect their business through insurance and how Pogo may be able to help.
You’re a mom, which means there is a constant whirlwind of activity going on around you. All the time, all over the place. Has Juniper lost her doll? Does Henry have a fever? Can you figure out a way to get Ryland to go to school without wearing a cape? But if you’re a mom who happens to be an entrepreneur, you’ve got an added level of chaos that requires juggling. Not only are you worried about your young ones, you’re also managing customers, invoices, and new client pitches.
One thing is clear: When you’re a mom and you run your own business, you’ve got a ton of responsibility on your plate. And with responsibility comes risk. That’s why we’re here to help you understand how business insurance can help protect you against the liabilities you might face as an entrepreneur.
I work for myself. Why should I protect my business through insurance?
As a mom, you’re already familiar with the term “safety first.” You tell your kids to be safe because you care about them. You want them to be happy and healthy and to succeed. You’ve invested a lot of time, money, and effort into making those rugrats a success– so yeah, buckle up, Juniper, Henry, and Ryland!
The same mentality applies to your company. It doesn’t matter if you’re working on your own, you have a team made up of a few friends, or you’re running a big shop. If you’re accepting payment for your goods or services, you’re a business. If you own a business of any sort, then yes, you should have business insurance. Why? Because it protects all of your hard work. It keeps your assets safe and helps it continue to run smoothly.
I don’t even know where to begin. Help!
First, figure out what your business risks are. This is important to know before getting started because it can affect what types of coverage you may need. The type of protection you need depends on the line of work you do. Every business is unique. Therefore, the risks vary. Your insurance plan should protect you from liabilities that may arise from your business. This is where an insurance agent can help out big time.
Elements that can affect risk include:
- Your industry
- Where you work
- The type of building you work in
- Your business assets
- Whether or not you’ve had insurance claims in the past
- How many employees you have (including part-time, full-time, contractors, and subcontractors)
- Interacting with the public
An insurance underwriter will assess your risks and come back to you with a quote, including the rates and terms of the policy (or policies) that fits your business best.
Liability insurance for entrepreneurs
Alright, Founding Moms, listen up. Owning your own company has risks, and that’s why liability insurance is a great place to start for entrepreneurs. Liability, quite literally, means “risk”. Three popular liability policies include general liability, professional liability, and cyber liability insurance.
What is general liability?
Basically, a general liability policy covers your bases for many of the common things that can go wrong (in business, not in life. So, if Juniper gets bubblegum stuck in her hair because Henry was feeling snippy, a general liability insurance would be of no help. However, peanut butter may be).
This policy will protect you from a financial loss if you happen to damage someone’s property, or someone injures themselves tripping over your equipment. Property damage and bodily injury are not the only benefits of general liability insurance. Nonphysical risks, like personal and advertising injuries*, are also covered. Not only that, if someone files a lawsuit against you, your court expenses, lawyer’s fees, damages, losses, and so on, may be covered.**
*Non-insurance speak: General liability also covers claims involving copyright infringement, slander, libel, and false advertising.
**Note: Defense costs are pretty much included in all policies, so I won’t repeat this notion going forward.
Professional liability insurance
Not every business requires this insurance coverage. However, if you provide expert services or advice for a living, it can be very important. People like designers, consultants or photographers can benefit hugely from professional liability insurance.
Professional liability insurance (also known as errors and omissions or E&O insurance) protects you in the event that a client claims your business made a mistake, was negligent, or failed to deliver a promised service.*
If you’re a consultant, you give advice for a living. If your advice results in any type of financial loss for your client, you may find yourself facing a lawsuit if your client is peeved enough. That jerk of a client could very well sue you. Paying the damages would seriously hurt your pocket, but with professional liability insurance, the fees would be taken care of. Can we all agree that having someone else pay for very expensive, very crappy, situations is almost always better than paying out of your own personal pocket?** Don’t wanna tap into that college fund, am I right?
*Non-insurance speak: Professional liability is basically protection against a dissatisfied client. Yep, it’s that simple.
**Note: I feel this very strongly, but I will also refrain from making this same point in every section.
Cyber liability for self-employed businesses
You might be thinking, “That sounds pretty serious. It’s probably only for big companies.” And if you are, you’re wrong. Cyber liability insurance protects any business in which a customer’s personal info may be stolen or exposed.
Okay, that does sound a little intense. But here’s the deal: Anyone who uses tech to do business should have a cyber policy. As for big companies: yes, they usually do have strong security systems in place.
And that’s exactly why, statistically, hackers go after smaller organizations.
You should think about getting cyber liability insurance if your business handles sensitive customer data (even something as simple as credit card information). It doesn’t matter if you needlepoint sassy quotes and sell them online, or make organic soaps and sell them at the local farmers market while your kids play with goats. Either way, you’re accepting customers’ payment information. Therefore, cyber liability is something to consider.
Cyber liability has an assortment of benefits, but here are a few:
- Customer notification
- Forensics investigation
- Identity theft
- Credit monitoring
- Reputation management
- Third-party services
- Equipment for business interruption
- Cyber extortion
- Regulatory fines and legal costs
Business property insurance
This one’s pretty self-explanatory. Business property insurance protects… well, your business property. Pretty much all commercial property can be protected under this policy– from smartphones to computers, photography equipment, and even the office building itself.
Should something get damaged due to theft, fire, vandalism, natural disasters, or whatever, this policy will have your stuff covered. You can choose to have your policy pay for losses based on the replacement cost or actual cash value. For more on that, go here.
A very important note about home-based businesses and property damage
Home-based businesses often rely on their homeowners or renters insurance to cover their business items– 48% of home businesses, in fact.
Unfortunately, what some may find out a little too late is that those policies will typically only cover up to $500 in work-related damages. That’s why it’s very important to protect your commercial property with the right kind of insurance.
It doesn’t matter if you’re a jewelry maker who works with fine gems, a slipper knitter, or an interior designer with multiple screens and surfaces to do what you do best. Protect your commercial inventory and tools with business property insurance.
Learn more about why home-based businesses need more than homeowners insurance.
I have work property, but I take it with me to meetings, shoots, events, and other places.
Business property insurance is limited to your business premises (there is typically a 500-foot coverage radius around the building). If you typically take your tools, gear, or equipment with you off-premises, you should consider inland marine insurance, which protects commercial property in transit.
Looking for a deal?
A business owner’s policy, also known as a BOP, combines general liability and business property insurance into a single package policy. You get better protection at a lower price than by purchasing each coverage on its own.*
It’s basically like finding the ultimate coupon when it comes to business insurance policies. Score! And with all the money you’ll save, why don’t you treat yourself to a nice spa day away from the kids? Massages, facials, manicures, anyone?
Another great thing about business owner’s policies is that it’s easy to tack on many other endorsements.
*Non-insurance speak: You can easily add extra coverage to a BOP.
Workers’ compensation for self-employed people
Also known as workers’ comp, or workman’s comp, this type of insurance is great for self-employed business owners with or without employees. Workers’ comp helps cover expenses incurred due to an employee’s job-related illness or injury.
You might be thinking, “My industry has no risk. There’s no way I’ll need this policy.” Well, workers’ comp can cover the most basic work-related injuries, even something as simple as carpal tunnel syndrome due to hammering studs while working on your artisan leather business.
Examples of such expenses include medical costs and lost wages due to taking time off work to recover. This policy not only protects you and your employees, but it protects your business as well. Medical costs can be extremely expensive. Paying for them out-of-pocket could potentially hurt your business… or maybe even sink it.
Workers’ comp policies aren’t always optional. Many states require employers to have the insurance by law. But you should consider workers’ comp even if you don’t have employees.
Business auto insurance
You need this if your company owns vehicles. Why? If you are driving your minivan for a work-related reason (even something like picking up more yarn for your crocheted baby hat business) and something happens, your personal auto policy typically will not cover the incident. Learn more about business auto insurance.
Hired & non-owned auto insurance
This kind of auto insurance provides liability protection for vehicles you borrow, rent, or hire. It also pertains to employees who use their personal vehicles on behalf of your business. Learn more about hired & non-owned auto insurance.
Do self-employed business owners need umbrella insurance?
It depends. Umbrella insurance is also known as excess liability insurance. Insurance policies have limits on how much they will cover if something bad happens. Umbrella insurance boosts the limits of your existing policies.
So if you have extra liabilities that your company may face, then yes, you should consider this policy, as it can help pay for the extra expense of unexpected disasters that could put you out of business.
For example, let’s say your business auto policy covers up to $500,000 in damages. You’re in an accident, whose costs add up to $550,000. With umbrella insurance, the additional $50,000 could be covered by your policy. Otherwise, you’d have to pay it out of your own pocket. And before you know it, poof! Juniper’s college fund could be seriously impacted.
Okay – I know why moms should protect their business through insurance.
Now that you have more of a grasp on which business insurance policies might be a fit for you and your business, you’re ready to get an online business insurance quote.
With one simple quote form, Pogo’s team compares over 30 insurance companies to get you the best coverage at the lowest price— including liability, property, workers’ compensation, and more. The experts at Pogo work for you, not a commission. All quotes and advice are free.
Not ready to get a quote? Reach out to an insurance expert.