As a small business owner or independent contractor, you’re constantly working through the hurdles of the workweek—whether it’s hitting your deadlines, managing your employees, or ensuring that you’re generating enough income to support yourself, you’re always in the driver’s seat. And in reality, the last thing that you want to deal with is insurance.
But all businesses need insurance to protect them from liability, and we’ve created an easy guide to help simplify the process, remove the hassle, and show you how to get business insurance. Your first question (probably):
Do I need business insurance?
Running a business or working for yourself is inherently risky. Combined with the fact that today’s climate is particularly litigious, just one mistake could really set you back, especially if it eats up time otherwise meant for growing your operations. Third-party property damage, bodily injury, and claims of negligence are a few reasons why every business or contractor needs to have some form of business insurance policy in place.
Say, for instance, that while you’re working you accidentally damage your client’s property. Or that, in some freak accident, they injure themselves while you’re rendering services and blame it on you. Lastly, what if you have a fickle client that is displeased with the work provided, claiming that you breached your contract?
Without business insurance, you have no safeguard in place to help protect you from these mishaps. The reality is that all businesses could benefit from general liability insurance and professional liability insurance.
How to get business insurance
The first part of the process is understanding your exact liabilities and what you need to safeguard against. The last thing you want is to purchase a policy, pay for it monthly, and, once a claim is filed, realize that you were not protected for the right things.
It starts by understanding the risks you run and your business needs.
Think about your company or practice. What kind of services do you render? Do clients come to your office, do you visit their homes? What are the risks inherent to your line of work? Ultimately, what are the instances in which things can go wrong?
You don’t need to be an expert to understand the exact type of insurance you need. If you know where you might be liable, then consider general and/or professional liability insurance.
General liability insurance
General liability insurance covers bodily injury, property damage incurred by a third party, and personal injury. It is designed to protect you in the case that one of your clients or a third party is injured due to the services you’re rendering. Additionally, should property damage occur to a client or third party, general liability insurance can help mitigate the consequences.
General liability insurance scenarios
You’re a personal trainer. Your practice involves traveling to your clients’ homes and bringing the workout to them. While at a client’s house, should the workout activities lead to property damage, you could be held liable for the expenses.
Or you work in the trades. You’re installing joists in a garage, carrying out a remodel. While the work is underway, should a loose bolt give way to a beam dropping and injuring a third party, you could be held liable.
Lastly, as a consultant, you run a tight ship. Your office space is impeccable and you keep it that way for good reason (to impress clients). Should the perfectly smooth flooring lead to someone slipping and injuring themselves, then you could be liable (even though it wasn’t you that did the cleaning).
Whether it’s errors on your own part, freak accidents, or general mishaps, all it takes is one person that finds you liable for a claim to land on your doorstep. If these are risks you face with your business or practice, then general liability insurance is for you.
Quick note: a general liability policy typically will not cover an employee’s work-related injury. For that, you should consider purchasing a workers’ compensation policy. It also doesn’t cover the damage done to your personal equipment. If you want to insure your business property, then consider a commercial property or auto insurance coverage.
Professional liability insurance
Also known as errors and omissions insurance (E&O), this type of coverage protects you when a client says, “you didn’t do your job right.” You might think, but isn’t that subjective? The reality is that there are many cases in which a client can file a lawsuit for negligence, claiming that you did not deliver on the services you promised.
Professional liability insurance scenarios
You’re a career coach, working tirelessly to help people in the workforce achieve their goals. You give them advice, create 5 to 10 year plans, and recommend certain courses of action to help them compete. One of your clients, however, follows his interpretation of your advice and aggressively (even prematurely) asks for a raise. Instead, he’s demoted. He blames you for his failure, saying you didn’t give him the correct consultation. Now he’s suing you and you have to hire your own lawyer.
You’re a photographer and you’ve just finished your best wedding yet. After you ship the deliverable to the client, to your surprise, they absolutely loathe the pictures. Despite you explaining your services, showcasing your camera, and telling them exactly what kind of photos you’ll be taking, they think it’s your fault that the pictures came out as they did. They file a claim saying that you were negligent in your work.
A professional liability policy can help protect your business should a client accuse you of being negligent in your work or claim that you breached your contract.
Reviewing your business insurance quote
Take a look at the quote, review the items, and ensure that you’re covering yourself for everything you need. If the terms are agreeable and everything is in order, then there’s no need to amend. Below are some of the key factors to review:
The policy limit
Arguably the most important line-item of your insurance policy, the policy limit is the amount you’re insured for. It’s typically a big number, like $1M, and it’s the maximum amount the insurer would pay out for legit claims involving your business. Be sure you know the exact policy limit you’re selecting, as this could be a deciding factor should a hefty claim be filed against you.
Inclusions & exclusions
If you do not know your inclusions and exclusions, then you don’t understand your insurance policy. Be sure to look into exactly what the policy includes or excludes, as this will determine the terms of your policy and influence the rate.
Deductible & premium
The deductible is the amount you are responsible for out-of-pocket. This is the money you have to pay before insurance takes care of the rest. Be sure to pay attention to this number, as you’ll have to pay that amount before your insurance steps in to help protect you from a claim. The premium is how much your insurance policy costs you each month.
If you do not agree with the terms of your policy, or if it excludes certain liabilities that you need to protect against, you need to reevaluate. For instance, if your line of work has a high inherent risk, additional coverage may be well worth the cost, and can provide an additional cushion against high compensation figures sought by plaintiffs. This is common for professionals like:
- Lawyers Consultants
- IT Consultants
Thimble: taking the hassle out of business insurance
We know, we know—insurance is a drag. It’s not fun to research, and it’s one of the least sexy things about running a business. But, it’s extremely important; every independent contractor and business needs it.
But worry not. We’ve simplified the process for you. You don’t have to deal with difficult jargon or over-complicated policies. You dictate the terms. You set the limit. We provide the coverage when it works for you.
Once you’ve identified what type of business insurance you need, then all you have to do is click “Get a quote” or download the Thimble mobile app. From there, we’ll need some basic information from you, like:
- Details about your business or practice
- Your ZIP code
- Desired coverage length (choose from hourly, daily, monthly)
From there, we’ll generate a policy that outlines your costs. Really—it’s that easy.
Once you’ve finished the above steps, now it’s time to purchase the policy. After you’ve clicked “purchase,” we’ll ship a Certificate of Insurance (COI), your proof of insurance, directly to your inbox. Additionally, you can pull up the COI from the Thimble mobile app, having it on-hand wherever you go.
Should you need to add Additional Insureds or generate more COIs, you can do it all free of charge. And, if for whatever reason you need to cancel, you can, penalty-free, up to an hour prior to when the terms begin. That’s insurance made simple. That’s Thimble.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.