If you run a business, you probably already know that no two businesses are alike. An online jewelry business or web design service based in your home won’t have the same needs (or hazards) as a food truck or florist shop. From home-based enterprises to businesses run out of a vehicle or a brick-and-mortar location, each has different needs for protecting everything you’ve built from the ground up.
That’s why insurance matters: Making sure you have a sound insurance plan to safeguard your specific business helps you continue to thrive, even when things don’t go according to plan.
How to find the right insurance to protect your business
It’s vital to know what kind of insurance your business needs. While it’s best to talk to an insurance agent about your unique needs as a business owner, here are important questions to get you started:
Is your business based in your home?
If so, you may think your homeowners insurance has you covered — but it probably doesn't. Your homeowners insurance may have a limit of only a couple thousand dollars for equipment or merchandise used at home for your business in case of fire or theft, for example. Fortunately, you can either: add a homeowners policy endorsement to your existing coverage, or get a State Farm® business insurance policy to cover your home-based business.
A homeowners policy endorsement may work for your business if you:
Have less than $4,999 worth of business property at your home-based business.
Don't invite customers to your home-based business.
Only have $750 worth of personal property intended for business use outside your home.
Do you need a business insurance policy for your home-based businesses?
While your homeowners insurance policy might provide liability protection for certain incidents, this will not extend to home-based, business-related activities. For example, if a customer comes to your home to pay for goods or services and suffers an injury, you may not be covered.
A business insurance policy may be best if you:
Provide services directly to customers in your home, such as tax preparation or hair services
Plan to have $5,000 or more worth of business property at your home-based business location
Rely on income from your business to support your household
Have you hired employees?
If you have employees, you'll need a workers’ compensation policy, even for low-risk settings. Accidents can happen anywhere, which is why nearly every state requires businesses with employees to carry a workers’ compensation policy. This way, if a team member goes down due to a work-related injury or illness, the costs of medical expenses and lost wages won’t land squarely on you.
Do you use a vehicle for your business?
If you do business on the road, it's a good idea to add a commercial auto policy, which covers your owned or leased business vehicles that you or employees use on the job — and when you’re in transit between sites. Ask your insurance agent about a commercial auto policy or getting rated as a business vehicle on your personal auto policy to make sure you're covered. You also can add liability coverage for drivers using vehicles not titled to them.
Could you be hit with a lawsuit?
You may never be sued as a business owner, but lawsuits are fairly common, and can cost you tens of thousands of dollars — or more. Commercial liability insurance gives you added protection, so you don’t have to pay out-of-pocket for expenses like legal costs, medical bills or damage to other people’s property that you may be legally liable for.
Do you reassess your insurance needs over time?
Because your business grows from year to year, it's important to connect with your insurance agent annually to decide if your coverage needs have changed, too.
As part of its ongoing commitment to support small business owners nationwide, State Farm served as a Presenting Sponsor of The Black Women’s Expo (BWe) in Chicago, Illinois, this summer. BWe is the nation’s longest-running exposition where women gather to share ideas, search for solutions and grow their businesses.
Questions about what your business needs? Visit StateFarm.com/smallbusiness.
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