Depending on where you operate your business, you will face a unique set of risks and exposures. Is your business protected?
When it comes to protecting your livelihood, what happens in your company’s physical space is all-important. Without the right insurance, one mishap could put your company’s future on the line.
As it turns out, depending on where you operate your business, you will face a unique set of exposures, says Scott Harris, Assistant Vice President, Product Development at The Hartford, an insurance provider that specializes in small business insurance.
Exposures will vary based on your individual business. And although no two small businesses are the same, one main consideration exists no matter what – where you operate your business. Perhaps you work out of a rented space or maybe you work from home. Here’s a look at both scenarios.
If you are renting office space, the landlord or property owner is responsible for insuring the physical building. Unfortunately, this doesn’t mean you are protected: if you want to safeguard your belongings and survive potential liability claims, you still need a business insurance policy.
Usually insurance isn’t optional. Landlords and building owners may include specific insurance requirements in a rental agreement. Depending on your business—and the requirements in your lease—a business owner’s policy is often enough. This type of insurance helps cover financial losses should your property get damaged, as in a fire. While the building owner’s insurance would cover physical damage to the building itself, it does not extend to the furniture, equipment, or belongings in your rented office space.
Landlords sometimes also require tenants to take out general liability insurance, which helps protect your business and employees from the risks of certain lawsuits. For example, it could pay for legal costs or damages should a customer or contractor file a claim against your company as a result of an injury, or reimburse a customer for medical bills resulting from a fall sustained in your office space.
“Landlords and building owners don’t want to be involved in any legal matters that may occur because you have patrons using the space,” Harris says. “There might be specific requirements in your lease that cover indemnification of the landlord, meaning any liability gets passed on to the tenant.”
Such stipulations can be shrouded in dense, industry-specific language that makes the transfer of liabilities “challenging to understand,” Harris says. “That’s where an insurance carrier can assist in helping you understand what those requirements are and making sure the necessary protections are in place.”
Even if your lease doesn’t require it, taking out general liability coverage is typically a good idea for your business, particularly if customers or other third parties regularly visit the space.
You may not be saddled with the same insurance requirements as if you are leasing a business space from a landlord but working from home poses a new set of questions, Harris says, along with new potential exposures.
Maybe you bring clients into your home or the use the space to store expensive business equipment. If a customer sustains an injury while in your home or should your equipment get damaged or destroyed, Harris advises that these expenses may not be covered by your homeowner’s insurance.
Therefore, a primary consideration is to untangle “your business affairs from your personal affairs,” he says. This means obtaining a general liability policy, which helps protect against bodily injury claims, property damage, and personal and advertising injury cases.
If you keep expensive business equipment at home — appliances and tools - and rely on this equipment to get work done, you may also want commercial property insurance, which helps cover reimbursements should the equipment get stolen or damaged. Oftentimes, this policy is bundled with general commercial liability insurance, and sold as a business owner's policy.
As a rule of thumb, “small-business owners are risk takers,” Harris says, a quality that fuels much of their success and keeps them aggressively pushing forward rather than dwelling on potential mishaps. But, as Harris says, “All it takes is one claim.
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