Are you starting a business in the new year, or do you know someone who is? January is a popular month for starting a business, especially remote or home-based businesses. Remote and home-based businesses are those that are typically run by a single person, using a laptop or home computer, to provide a service.
Examples of these businesses include consultants, coaches, bookkeepers, social media managers, digital marketers, or accountants. They usually meet with clients over zoom, at coffee shops, or at the client’s location. They can work from almost anywhere as long as they have a laptop and an internet connection. Because many of these businesses are running a very low overhead operation, and their deliverables are digital or somewhat intangible, they don’t always think they need commercial insurance. In reality, every business needs commercial insurance because every business has inherent risks.
Service-based Businesses Need General Liability Insurance
General liability insurance provides “bodily injury and property damage” coverage for small businesses. Service providers who work from a laptop might think this is totally unnecessary, but there is always a risk of causing injury or damage.
If the business owner visits a client at their office, they have the potential to cause harm. Here are a few examples of what that might look like:
- The business owner drops their laptop on the client’s foot, breaking a toe
- The business owner plugs a piece of equipment into the client’s outlet and somehow causes a short circuit that fries equipment belonging to the client
- The business owner trips and knocks over the client’s equipment, or pulls artwork from the wall
- Someone trips over the business owner’s briefcase and suffers an injury
Some of these scenarios seem very unlikely, but we have actually processed claims along these lines for our insurance clients. Even if the business owner is not found to be liable for the injury or damage, they will still need to cover the cost of defending against the claim. Insurance protects the business owner from having to pay out of pocket for those legal expenses.
Furthermore, many businesses require the vendors and consultants they work with to carry general liability insurance. If they commonly bring service providers onto their property, they want that layer of protection in place. Some companies take it a step further and require an Umbrella policy, which extends the limits to meet much higher claims. Umbrella policies can cover general liability, commercial auto, workers compensation, and sometimes professional liability.
Consultants Need Professional Liability Insurance
Professional liability insurance is for the financial harm a service provider could cause to a client. This can also be called errors & omissions coverage or malpractice insurance depending on the industry. Whether the business provides advice, software as a service, or completed business tasks, they expose the client to various financial risks. If the client feels that the service provider is at fault for their financial loss, they can sue for damages. Just like with general liability, professional liability covers the cost of defense even if there are no damages determined.
Some examples of how a small business might use professional liability coverage include:
- The business owner recommends a certain accounting or bookkeeping software, which then gets hacked, causing the client to lose access to their accounts
- The business owner implements a marketing strategy, and the client reports that business decreased following that implementation
- The business owner implies that the client can achieve certain results with their guidance, coaching, methodology, service, etc. and the client finds that the advertised results did not come to fruition
- The business owner executes, or fails to execute, an action on behalf of the client that leads to a financial loss
This may be the most important insurance that a fully remote business owner will carry. Often, the claims that bring professional liability into play are highly subjective, so it can be costly to get all the way through the legal process.
Business Property Insurance for Home-based Businesses
When someone runs a fully remote or home-based business, they might expect that their homeowners insurance covers their business property. This is not true, though. Homeownerspolicies specify that business property is not included in the coverage.
If the business owner is running operations from a spare bedroom or a corner of the basement, that space and any business equipment in it should be covered under a business property insurance policy. These low-cost policies will cover computer equipment, furniture, storage containers, and other business property. If a damaging event happens at the house, each policy will cover what it should to restore the home and business owner.
Small Business Insurance for the Smallest Businesses
No business is too small to need insurance. In fact, the smallest businesses may be running on very slim margins that would make any claim at all a career ending event. Insurance is not something to wait to consider until the owner has gotten their feet under them or has made sure they can get this thing off the ground. It is a start-up necessary investment.
Even if the whole business is contained within a laptop, the owner needs to have coverage for worst-case scenarios. If someone you know is getting their business off the ground in 2025, please introduce them to us. Smyrl Insurance has been supporting small businesses, even from their very first day of operations, for over 65 years. We educate, nurture, and empower clients to make sure they understand their need for insurance and how it works. Our detailed intake process helps us create a solid picture of what the business does so that we can recommend the right products at affordable rates for their needs. Whether a business is just starting out, or has been around for many years, we can assist with general liability, professional liability, umbrella coverage, commercial auto, cyber liability, and other types of business insurance in Hatfield, Lansdale, Souderton, Harleysville, and throughout the region in Montgomery County and Bucks County, Pennsylvania.
