Covering Your Ass(ets): Do You Need Business Insurance?

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The short answer? Yep.

Unlike the apps you use to manage your business and rely on daily, we tend to only think about insurance when we see the payment leave our bank account — or we really need it.

It’s far from exciting and no one really likes talking about or dealing with it, but just like you insure your home and car, you should protect your biz and livelihood. Otherwise, worst-case scenario? You could kiss that car and house goodbye.

Basically, you need business insurance if:

  • Your business property can’t be easily and affordably replaced (like inventory and expensive equipment)

OR

  • There’s a reasonable chance your business could get sued (you suffer a data breach, a product you make or sell is defective, you make a mistake that causes a loss) 


How this is different from the liability protection you receive as an LLC, partnership, or corporation?

Your business structure may help to protect your personal assets (i.e. as the business owner, you won’t be held personally liable if things go wrong), but it doesn’t protect your business from disasters like fires, data breaches, or personal injury lawsuits.

There are three main types of business insurance. In this post, we’re going to focus on Professional Liability Insurance. 

(Coming Soon: General Liability + Business Owner’s Policy)

Professional Liability Insurance


Who needs it?

Any business that provides advice or services to clients, such as consultants, designers, social media managers, technology providers, photographers, and coaches.

A client could also request that you have professional and/or general liability insurance before awarding you a contract.


What it is + why it's worth the $

Also called errors and omissions (E&O) insurance, a general professional liability insurance policy will cover legal fees that could otherwise cripple you and your business.

It protects your business if you are sued for:

  • making a work mistake that results in a loss to your client

  • not delivering services as agreed upon

  • negligently performing your services

This applies whether the event is actual (mistakes happen) or alleged (your client *thinks* you made a mistake, even if you didn’t).


How much does it cost?

This depends on several factors including industry, business size, and location, but the average small business can expect to find coverage for under $85/month.

We use Hiscox, which offers quotes in minutes and has policies starting at $22.50/month. Tip: If you operate a home-based business, be sure to let them know. Providers can usually offer reduced rates in some areas to reflect the lower level of risk you face.

Obviously coverage will vary, but as an example, under our plan we’re covered for everything below:


Covered:

  • Alleged or actual negligence

  • Defense costs

  • Personal injury (e.g., libel or slander)

  • Worldwide coverage

  • Temporary staff and independent contractors

  • Claims arising from services provided in the past

  • Claims and damages


Not covered:

  • Bodily injury or property damage

  • Fraudulent acts

  • Employment matters

  • False advertising

  • Patents and trade secrets

  • Personally identifiable information


So, there you have it. But let’s be honest, you were probably well aware that insurance is a thing you should have long before reading this. Maybe you’ve even had a “look into business insurance” task on your list for a few months now (we won’t judge).

Either way, if you have clients or products, it’s a necessary evil and definitely worth discussing with an agent. And if you’ve procrastinated waaaay waaaay beyond your comfort zone, fear not. Some insurance providers allow you to select a retroactive date for your coverage to help you retroactively cover your ass(ets).

Jessica Zepeda