Becoming an entrepreneur is not for everybody. It requires an incredible amount of risk, drive, and creativity to carve out a niche in a specified market and differentiate yourself from the competitors.
Many entrepreneurs are inspired by the idea of not having to go into a boring eight-hour shift at the same time every day. Still, newbies don’t realize the amount of extra burden it takes to run a successful business from the ground up.
Topics that get forgotten include paying attention to payroll for your employees and keeping track of the money that is allocated for taxes. You also need to think about buying the types of business auto insurance to protect your workspace and vehicles that are going to be used specifically for your business.
We’ll give you tips on finding the right insurance for your business that is specific to your field. We will also mention how financially viable it is to put your money into certain types of insurance and when you can get by with forgoing a policy on your car or place of industry.
When and why would I need business auto insurance?
Many people don’t realize that their car or truck may need business auto insurance if it’s used for more than personal adventures and errands. Everybody drives to their place of employment, and having a commuter usage classification under their personal auto insurance policy is the right way to go.
But hat if you are driving around to multiple locations throughout your day for your small company, going door to door selling your product or service? Getting your hands dirty and knocking on strangers’ doors puts your vehicle at high risk because of its high usage rate.
You need to look into an insurance policy for your car that is dedicated to business if any of the above scenarios sound like they apply to you. This is because most car insurance companies will not cover an accident that happens on the clock.
Do I need to take out insurance on my home if I run a business out of it?
You run your small business from the comfort of your home, perhaps setting up an online operation. You may think you are off the hook from any business-related insurance expenses. This is where you will get bitten from behind if you don’t think about every potential danger that could happen during the running of your company.
What if you live in an area that has a lot of water-related natural disasters? Things like flooding or hurricanes are prone to happen. You should take out a specific flood insurance policy that will cover the damages to your home in the case of destruction.
If you don’t take out a homeowners insurance policy that covers flooding, there could be huge consequences. The water damage from a storm could destroy the computer equipment that you use to run your home business, and you will potentially be out tens of thousands of dollars.
Make sure that you cover all your bases so you aren’t left picking up the pieces of a natural weather event.
There is no specific homeowners insurance policy that covers entrepreneurial items that are stolen or destroyed in your home. They should be covered fully in your policy as long as you let your insurance company know that there is a certain room or rooms in your house that are dedicated to the business you run.
Neglecting this fact may make it more unclear to your agent what items belong to your family and which ones are property of the company you are a part of. If you have too many physical parts that are required to run your business, you may find it easier to get a rented building insured that is specifically used for your company.
How do employees complicate the entrepreneurial lifestyle?
Entrepreneurs don’t think they need insurance on cars and buildings for their business. They are in firm control of their enterprise. Imagine if you only have a couple of other people working for you. You would probably think the same thing: I am responsible for everything here and I will make sure that nothing bad happens.
This leaves startups vulnerable to a lack of insurance when they start hiring more employees because of the rapid growth of the business. If you are running a bakery that ships all around the Seattle metro area, and you can’t afford to hire a rideshare to deliver your fresh goods, you might hire your own employee to do the driving.
This is when you should think about how imperative it is to insure the vehicles that these drivers will be taking around town. You will be fully responsible for the costs of the damage that occurs if your driver gets in an accident and initiates the damage in the collision.
You open a whole other can of worms going down this path. The victim of a car crash caused by someone working for you may decide to sue you and your company. This would have horrific consequences for the future of your small business and your reputation as an entrepreneur.
Don’t worry about the finances of taking out these extra insurance policies. It is simply a reality of running a small business that so many young entrepreneurs forget when first starting out.
Being your own boss means you have to concern yourself with legal and logistical issues that you otherwise wouldn’t as a normal employee. Isn’t that what you wanted, though — all the risk and reward? Teaching yourself how to be your own boss and then learning how to employ other people is not learned overnight.
Be patient. Listen to those who came before you. Ask for their advice and take it to heart. Entrepreneurs are like Spider-Man: With great power comes great responsibility — and extra insurance policies
Shawn Laib writes and researches for the auto insurance comparison site, AutoInsurance.org. He enjoys helping consumers understand the positives and negatives of taking out policies that affect them on a personal and professional level.