The Expert Podcast

so do you need commercial insurance for your business. maybe have a small home based business that sells things on eBay maybe you have some type of food trucks maybe you have something that's small maybe have a larger business. it's likely that no matter what business you have you probably want to have some type of commercial insurance. sure if you have a store or a commercial building you're gonna have liability insurance G. L. maybe E&O insurance but what about a home based business. well keep in mind a few things now remember we're not attorneys we're not giving you legal advice we are commercial insurance agents but we're not your agent and we don't know your particular business so get good advice from qualified professionals before you take action. home based business is going to create some liability for you that you may not have coverage for. you have a homeowner's insurance policy if you own your home that policy will very have specific language called exclusions from coverage for anything related to commercial activity. so if let's say you're doing something in your garage to maybe make work benches for somebody or you know Adirondack chairs for flea markets or you doing something in your garage that is a commercial enterprise. that activity is very likely to be excluded from coverage from your homeowner's insurance policy. what does that mean well sure if somebody gets injured from one of your products you're not gonna be covered on your homeowner's policy and you may not expect that however it could go a step further. if that activity causes damage to your house if your soldering some wires because you're building little ham radios let's say as a commercial business and your soldering iron catches your house a fire burns to the ground it's possible that your insurance carrier might excluded that claim because it was a commercial activity. how they gonna find out Facebook eBay they're gonna look at your social media they're gonna look at your bank account to find out where you get income from your tax returns if it can be proven that the activity that caused the damage to your house was because of a commercial enterprise you might have exclusion of coverage. if you have tools or equipment in your house or computers like you see behind us if their use for commercial purposes they may not be covered if you have a loss your house burns down and you lose five thousand dollars worth of tools that are commercial tools that might be an exclusion of coverage. so you might want to add additional coverages the one thing you're find if those coverages are not very expensive it's usually pretty cheap to add on endorsements for coverage for part time or incidental business activities in a home. now those business activities are creating more liability also like product liability then you might want to add additional coverage for that. if you have a certain professional designation like if your CPA accountant attorney you want to get separate coverage for that E&O insurance errors and omissions insurance what if you're just selling stuff on eBay. you're selling let's say flea market products that you buy locally that you know will sell more on eBay well you may want to get coverage for that. what if you buy something at a flea market that unbeknownst to you is a recalled product. and you sell it on eBay somebody buys it gets hurt and their injured. can they sue you well anybody can sue anybody we know that for a fact will they win well I don't know if they're gonna win or not but even if they don't it's gonna cost you a lot of money to defend that lawsuit. and if the attorney for the other side can demonstrate that this just wasn't a one time thing you just sold something from your garage or something you find in your attic if they find that you have an ongoing enterprise of selling used items on eBay for the last eight months or a year and you've made you know sixty two thousand dollars they're going to say that's a commercial enterprise and you're liable because you're now business. and if you don't have a separate LLC and you know corporate firewalls everything's on you individually and everything you own personally is at risk. remember again we're not attorneys are not giving you legal advice make sure you get good legal advice from a qualified attorney but any business enterprise even if you're not thinking of it can create liability so you might want to have a policy for that. in some cases you may want to get a surety bond for some of your activity if you're dealing with the public. a general liability policy is you usually pretty cheap it's gonna go by your revenue. so if you have a small business that does not make a lot of money a GL policy will be cheap. you may want to look at other things like a BOP a business owners policy which has a certain combination of coverages. there's also a CPP commercial package policy which has also certain coverage packages. your insurance agent can normally help you with that whatever you have for insurance on your personal side your personal lines coverages home auto life health that same agent probably can help you answer questions about your commercial activities. they may have a different person in their office that handles that but if it's a decent size agency they can probably help you out in their commercial lines division. you probably have more liability exposure and need for coverage for commercial lines than you think. of course nobody wants to pay money for insurance you know there's no joke that at a party nobody wants to sit next to an insurance agent because they're just going to try to sell them insurance. but in this case if you have any type of business activity that's creating revenue generating money for you you want to look to see how to protect that. you don't have to spend a lot of money you probably don't have to spend as much as your agent might tell you but you do want to have some type of basic protections and understand what they cover and what they don't cover. the most important thing to look at on the insurance policy is the exceptions or exclusions from coverage so that you know what specifically not going to be paid for if you have that type of claim. most commercial policies also have legal defense so if you get sued even if you win they cover that legal defense and that can be more expensive than even the loss sometimes. any type of litigation can be tens of thousands it very easy to hit a hundred grand on a commercial litigation or on a business litigation case. piece of cake specially if there's some statutory or contractual requirement that you have to pay for the other side's attorney too if you loose. so that can add up quick. so you want to look at those coverages also if you using your vehicle for any kind of business activity you know if you're shuttling parts between your warehouse and your home or whatever it is you may also want to look at commercial auto because if the activity of your vehicle is discovered to be used you know seventy eighty percent for business purposes you're bringing materials back and forth even going to trade shows we've seen claims denied because the vehicle it was a van was used to bring trade show materials and that's really all we use for was never used for any personal use there was an accident and it was denied because it wasn't commercial policy. and you don't have that kind of denial because it can be an expensive event. you also don't wanna get non renewed on your personal lines because you're engaging in those kind of activities that's not doesn't doesn't have coverage. every type of business is different but certainly any business activity is gonna create exposure or somebody could claim loss damage lawsuit and you want to be protected from that. the last thing for business insurance is cyber liability anything you're doing probably is online or it has some online component. what happens if you get hacked or you have some ransomware or somebody steals your customer files. even if you're small business that only sells you know baby clothes through Facebook if you have to or three hundred customers and somebody somehow hacks gets those customer files and distributed them online you could be liable. most states have laws that put you in jeopardy if your customer private information is released to third parties. so you may wanna have cyber liability insurance to protect you from that. this is not meant to be scary or make it harder to do business but a one time conversation you should have with a qualified insurance agent commercialize agent to put together coverages for you so that you're not doing things that create exposure that you don't know about. look if you find you have certain types of risk or exposure and you're willing to take that risk that's fine that's up to you but you don't want to have a risks that you're not aware of that could be life changing or a financial disaster crisis because you didn't know about it