Commercial Insurance Tips For A New Business In NH

Congratulations! You have decided to pursue your talent and start your own business. This is an exciting time, but don't let the details required in launching the new business distract you from your objective - growing it! You should rely on the expertise of professionals to ensure you are protecting your investment of time, energy and money as best you can from the very beginning. This team of experts should include an attorney, accountant and an insurance agent.

Whether you are an independent consultant, opening a retail shop or providing a service like dog walking or landscaping, you need a NH commercial insurance policy; however what should be covered will certainly vary. HPM Insurance located in Amherst and Bedford has been insuring small businesses for decades. Here are a few of the more common questions we receive from start-ups.

"Why Do I Need A Business Policy If I Only Work Out Of My Home?"

Most homeowner policies exclude both liability and/or property damage arising from business activities by the insured. That does not mean you can not add coverage as many home insurance carriers allow coverage for some small or incidental businesses; but it is up to the company's discretion. The key is to talk to your insurance agent before you make any assumptions no matter how small the business. You would hate to learn after a claim that you could have been covered for a claim for less than $50 if you simply notified your agent of your business.

Another reason you may need a business policy is that your homeowners policy provides very limited coverage for any business property. A typical policy includes up to $2500 for business property kept at your home and $250 while away from your home. If you have a laptop, printer, fax, inventory, etc. you can quickly exceed this limit.

"Why Would I Need A Commercial Policy If I Am An LLC Or Corporation? Doesn't That Protect Me?"

An attorney is the best resource to consult with when setting up your business regarding the legal and tax protections afforded by the various business filings; however the type of business you legally set up will typically not suffice for protection for your business or allow you to enter into many contracts. For example:

  • You decide to rent a space for your start-up. The landlord will most likely require proof of a premises liability policy to protect them against anyone injured due to your business occupying the space. Even if the landlord does not require actual proof when you sign the lease, it is most likely addressed within the lease itself. If you sign a lease indicating you have insurance and you do not, you would be opening your business up to a law suit.
  • A new client wants you to give them a certificate of insurance showing you have a Commercial General Liability policy (CGL) or professional liability insurance policy. The client would want this so they have a way to collect should your business cause them harm. A CGL policy covers many of the common liability risks that face any organization, while a professional liability policy covers liability resulting from their rendering or failing to render professional services. (Errors and omissions and malpractice are other names for professional liability). Please be aware that most CGL policies do not include coverage for professional liability so this must be purchased separately.

*Note, as a business owner, you too should require that any business you work with provide proof of insurance as well. This proof is provided on a "certificate of insurance." Do not accept a copy of the policy or an outdated certificate because the policy could have cancelled for nonpayment after the policy issued. Only a current certificate, with your name on it, should suffice. This is not an inconvenience as it is very common practice for insurance agents to regularly provide certificates of insurance.

  • Even if you do not rent a commercial space or enter contracts, you should still consider commercial insurance for practical and ethical reasons. Most people start a business doing something they are passionate or knowledgeable about. Would you really want to work hard to establish your business only to dissolve it to avoid paying a claim? Would your business recover from the bad publicity or negative public relations? Remember, very few can hide from social media.
  • Most CGL and E&O policies also include defense coverage. Do you know the going rate for a good defense attorney? Even seemingly frivolous claims still have to be defended. Wouldn't you feel better knowing you have an experienced attorney in your corner to help you navigate the endless paperwork of a lawsuit?
  • Lastly, no one is perfect and accidents happen to even the most careful business people. What if you were wronged by a business but they could not pay for damages because they didn't have insurance. How would you feel?

"I Don't Need Workers Comp Insurance. I Only Have A Part-Timer Help Out When It Gets Busy."

Worker's compensation laws apply throughout the US, and obligate employers to pay specified medical, disability (lost wages), rehabilitation and death benefits for an employee's job-related injuries or disease. The obligation exists regardless of whether the employer or employee was at fault, whether they are full-time, part-time, seasonal or occasional, volunteer or related to you.

If you decide to hire someone part-time to help during your busy season and say he/she trips over his or her own shoe laces coming in the door, you could not only be responsible for their medical bills, but also be subject to a hearing and hefty fine from the Department of Labor if you could not provide proof of a worker's compensation policy at the time of loss. It really is a big deal, so whether you have an employee, spouse, son, daughter, friend, or volunteer work for you, contact your insurance professional to discuss. If you would like more information about the definition of an employee vs. independent contractor, visit the NH Department of Labor website. It is not as cut-and-dry as you may think and just because the worker is not on your payroll does not make he or she a subcontractor in the eyes of the labor department.

You, Your Business And Your Vehicle: What You Need To Know About Commercial Auto Insurance

If you use your car or truck in any business capacity, including picking up supplies, making deliveries or registering your car to a business for tax purposes, speak to an insurance professional. Any of these things can severely impact whether you have coverage or not in a claim.

There is a previously written blog on the HPM Insurance web site called "NH Car Insurance vs. NH Business Auto Insurance: What's the Difference." This can answer many of the questions people have regarding commercial insurance but in short, you should absolutely have a business auto policy and not a personal auto policy if any of the following are true:

  • If your vehicle is owned and registered to a business
  • If your vehicle is ever used for public or livery conveyance
  • If your vehicle is ever used by you employee while in the course of employment
  • If you ever pick-up or deliver customer goods. This is true if the "customer" is another business, like a contractor delivering goods to another contractor. Delivery is delivery.

If you have a claim under any of these circumstances, the insurance company can deny the claim given that these are typically listed as exclusions in the standard auto policy.

This is not to imply that just because you own a business means you need a commercial auto policy. There is an endorsement that may be added to many personal policies to cover a business, however there are limitations. Speak with your insurance professional and they can help you decide what is best for you and your business.

"What Should I Do To Best Protect My Start-Up Business While Not Going Broke In The Process?"

  • Contact an independent insurance agent to discuss the specifics of your business. An independent agent represents many insurance companies and not just one. This typically provides more choice in coverage and price vs. going directly to a company where there is only one company and price and may not have all the options necessary to properly protect your business.
  • Be forthcoming with your agent about exactly what you are doing to ensure proper coverage. If you are a computer consultant, but also sell vitamins on the side under the same LLC, tell your agent that! Insurance companies do not like surprises and it is better to get all the information out to ensure you get the coverage you expect.
  • Review any contract before you sign it to ensure you have the proper insurance in place. If you sign a contract requiring $1 million in liability coverage and you only have $500,000, you may be on the hook for the difference.
  • Tell your insurance professional if you expand out of state or the country or if you expand your business beyond the original business model disclosed to the carrier. If you started out remodeling homes but then expanded to replacing roofs, that is something your insurance company would need to know. It is also critical to tell your insurance agent if you work out-of-state as worker's compensation is typically state specific. It can be amended to add different states, but again, your insurance company would need to know this beforehand.

You started your business because you are passionate about what you do. Find an agent like HPM Insurance in NH who shares that same passion. There is nothing more exciting for us to insure the small start-up and over the years watch it grow into a vibrant business. Let us help you protect your passion so you too can grow! Best of luck!

This material is for informational purposes only. All statements herein are subject to the provisions, exclusions and conditions of the applicable policy. For actual descriptions of all coverages, term and conditions, refer to the insurance policy or consult with an insurance professional regarding your specific situation.