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It was 10 years ago that I became a small business owner. I started out humble with this blog, but over the years I’ve become a media consultant, freelance writer, brand ambassador, and more. While developing my company, I made some mistakes, but I learned from them.
I would argue that my biggest mistake was not having enough insurance. I only became interested in this matter because one of my clients required me to have a policy before I could be accepted. It seems I’m not the only one who feels this way, as a recent TD study found that many freelancers, entrepreneurs, and small business owners haven’t taken appropriate steps to protect their businesses. I spoke with Tang Hung Trang, vice president of small business insurance at TD Insurance, who explains everything you need to know about small business insurance.
How important is it to have insurance for sole proprietors and small business owners?
Whether you run a hair salon or your own photography studio, running a small business can take a lot of time. Business owners are passionate and willing to take on challenges, but they also need to protect what they have worked so hard to build. One way to financially protect small business owners against unforeseen events is an individual company insurance policy.
A recent TD Insurance study revealed that many small businesses are not taking the right steps to protect their business, putting themselves and their company at greater risk of unexpected costs. Just over half of small businesses with one or more employees are covered by small business insurance. There are even fewer people running sole proprietorships (entrepreneurs who are the only employees of their company), where only 33 percent has insurance coverage for small businesses.
What about freelancers who only work from home? Do they need insurance? Does home insurance cover them?
Small business owners may think they don’t need insurance. For example, those who run a business out of their home may assume their homeowner’s insurance policy covers them, but that’s not always the case. Coverage limits on a standard home insurance policy may be significantly lower than the coverage you’d receive under a business insurance policy. There are also certain types of coverage that your home insurance policy may not cover. For example, if your business temporarily closes due to an insured event, you may not be covered for loss of income during that period.
Can you explain the difference between professional liability insurance and general business liability insurance?
Commercial Liability Insurance protects you and your company against financial loss caused by third-party claims including bodily injury, property damage, and personal and advertising harm resulting from your products, services or business.
Professional liability insurance, also called errors and omissions insurance, is financial coverage for claims related to inappropriate work or negligence. This may include failure to provide services to the client within the agreed time period, which may result in the client suffering financial loss.
Do business owners with employees need more insurance?
Small business insurance should be tailored to your specific business needs, and TD Insurance aims to help small business owners understand their insurance options and create a tailored insurance plan. We recommend contacting a licensed TD insurance advisor for advice on the appropriate type of insurance to meet the unique needs of their business.
What is the biggest misconception about insurance?
Many small business owners may not realize that they are currently uninsured. For example, many business owners believe that their personal auto policy automatically includes coverage for commercial use, but this is not always the case. Often, small business owners require clarity on the insurance coverage required for their business. This is supported by a recent TD Insurance survey, which found that 1 in 3 small business owners said they had a poor understanding of the types of insurance specific to their business.
How much does small business insurance generally cost?
The cost of insurance depends on a number of factors, including, but not limited to, the value of the business assets you want to insure, the specific risks associated with your industry, and your previous claims history. With the recent launch of our digital quote, we are also offering small business owners the opportunity to obtain an online quote tailored to their specific business profile. Additionally, they can also speak with a licensed TD insurance advisor to determine the right insurance coverage for the unique needs of their business.
What is the best way for people to learn more about the insurance they need for their business?
As I mentioned, we recommend that small business owners speak with one of our licensed TD insurance advisors to learn more about our small business insurance products or visit TD insurance for business for more information.
Final thoughts
Small business insurance is no different than any other type of insurance. You hope you never have to use it, but you’ll be glad you have it if you ever need to file a claim. Recently, I have personally noticed that most of my clients require me to have insurance before they will hire me as a contractor. Small business insurance is relatively inexpensive and counts as a business expense. It’s worth noting that small business insurance isn’t the only type of insurance you may need. You should also look into disability insurance, life insurance and critical illness insurance.
