The United States is a very litigious society; someone is to blame and at fault for something. While we won’t take up the responsibility debate on this blog, we will focus on reality and small business needs, home-based or not. Simply, many businesses require some level of basic insurance to cover potential liability.
Depending on the legal business structure, you may be personally liable for any claims of damage, defective product, breakage, loss of client revenue, etc. Examples include computer consultants that should probably carry errors and omissions (E&O) insurance. This is an insurance form that protects the insured against liability for committing an error or omission in performance of professional duties. Generally, such policies are designed to cover financial losses rather than liability for bodily injury and property damage.*
A second general common business insurance policy is broad form comprehensive general liability (BFCGL) endorsement. This insurance is a comprehensive endorsement to be attached to pre-1986 editions of the standard general liability policy that provided coverage enhancements including blanket contractual liability; personal injury and advertising liability; premises medical payments; host liquor liability; fire legal liability on real property; broad form property damage liability, including completed operations; incidental medical malpractice; nonowned watercraft liability; limited worldwide coverage; additional persons insured (employees); extended bodily injury coverage; and automatic coverage for newly acquired organizations.*
Insurance policies are vital if:
A) You have personal assets you might lose in a legal judgment
B) The business legal structure is a Sole Proprietorship or S-Corp where no corporate protection exists
Consider carefully your business risks and whether you can sleep at night without adequate coverage and possibly losing a great deal of money to a zealous litigator and client.
The author(s) of this article, Homepreneurs, and affiliated entities are not certified insurance agents and claim no expertise or authority in the insurance industry. Readers of this article are strongly encouraged to contact an appropriate insurance broker, agent, or appropriate entity to review individual circumstances. This article is solely an opinion of the author(s) who holds no liability for insurance options chosen by an individual, individuals, or organizations.
* Insurance definitions copied from the glossary at http://www.irmi.com/online/default.aspx