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A Primer on Property Insurance for the Self Employed

Small Business Owners Need Insurance To Protect Their Assets

To be a successful solopreneur, you don’t need to be a Rockefeller. The majority of self-employed small business owners start with borrowed capital (an SBA-backed loan, for instance, or money from a mortgage re-fi), and build their business from the ground up.

Self-employment isn’t Industry with a capital-I, it’s commerce. Whether you’re a freelancer, or the owner of an online micro-business, you are playing the role of a commercial agent and mining a relatively narrow niche of the broader economy.

Any piece of equipment or property that is essential to your business needs to be insured.

That doesn’t mean you need to think small, but it’s the “smallness” of small business that gives self-starters so much flexibility. Solopreneurs are captains of their own light craft, rather than enlisted men on some huge, leaky freighter.

Most solopreneurs own two or three major assets—that’s it. And that’s plenty. As a solopreneur, you don’t need to have a lot of stuff. But when you can count your assets on one hand, then it is absolutely essential that you protect each one against injury or loss.

Any piece of equipment or property that is essential to your business needs to be insured. Yes, insurance will take a bite out of your bottom line, but it’s worth it. Without proper insurance, your business is always teetering on the edge of a precipice.

A single accident or error can knock your business off balance and send you careening over the edge.

How Property Insurance Protects Your Business

Property insurance protects your buildings, equipment, documents, income, and revenue, from damage or loss. Basic business property insurance typically covers a building (and the property contained therein), from specific catastrophic events: fire, explosion, flood, theft, and vandalism.

Property insurance is available in two basic forms:

  1. All-Risk policies cover a wide range of events. Think of this as “basic coverage.” Typically, events that are specifically not covered by the policy will be noted.
  2. Risk-Specific policies protect your business from losses that result from specific events. Fire, flood, crime—you can buy a risk-specific policy for almost any type of liability, including business interruption. Depending on the nature of your business and the area where you operate (if you work in an area prone to floods or tornadoes, for instance), you might need to purchase Risk-Specific insurance as a rider attached to your general policy.

Home-Based Business Insurance

Just because you have a comprehensive homeowners’ insurance package, that doesn’t mean your home-based business is automatically covered by your existing policy.

Depending on the specific risks associated with your business, you may be able to add risk-specific riders to your homeowners’ policy to cover general business risks like property damage and theft. However, you may still need to purchase additional insurance for professional liability or product liability.

Talk to your insurance agent to find out what policies are available for home-based business owners.

Business property insurance isn’t a luxury, it’s an essential piece of your business’s financial strategy. So bite the bullet and get insured as soon as possible.

When you’re ready to purchase insurance, shop around: Contact at least three licensed agents to get estimates. If you are a member of a professional organization or small business association, find out if the organization offers group insurance at a discounted rate. You will sleep a whole lot better once you know that your business is adequately covered.

 

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