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Does Your Side Business Need Insurance?

We have been looking at various ways to make extra money, some of which could develop into full-time businesses such as cutting grass or cleaning houses.  Both of these services could lead to enough business such that you would have to hire employees.  You are also working at various locations and on the property of many clients.  One way to protect yourself and your personal assets is to form a limited liability corporation, but the other is to make sure that you have the proper insurance coverage.

Being a business owner is a huge responsibility. There are a lot of obligations that you must take care of when owning a business. One of these is making sure you obtain and maintain proper insurance coverage. There are many types of business insurance. This variety helps businesses get just the right coverage they need without being overinsured or underinsured. Two types of business insurance that are commonly obtained by businesses are public liability insurance and professional indemnity insurance. Some business people believe that they are both the same kind of insurance when in reality they are not.

Legally, businesses are only required to have one type of insurance which is known as employer’s liability insurance. This coverage protects employees in the event of injury. However, just because this is the only kind of business insurance required, this does not mean that is all a business should have. Any business that have customers or third party individuals, who come onto their business property, need public liability insurance. As the name implies, this kind of insurance protects businesses from claims that may be made by their customers or these third party individuals. If one of these people should be injured or have their property damaged they can legally make a claim against the business. As a business owner you are responsible for the accident. This is when public liability insurance can help. It can pay for legal expenses as well as any damages the business must pay.

The difference between public liability insurance and professional indemnity insurance is that professional indemnity insurance deals with claims made by customers. They are claiming the company caused some sort of negligence that cost them. Public liability insurance deals with third party claims that professional indemnity insurance does not. Knowing the difference between the two is important because some businesses may need both kinds of coverage.

Remember that I an not an attorney and requirements may be different for various locations.  Be sure to consult specific regulations for your area and meet with an attorney or insurance professional to determine the regulatory requirements for your type of business and your locale.  There is no sense making a lot of extra side income if you risk it all by not having the proper level of insurance.

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2 comments to Does Your Side Business Need Insurance?

  • Awesome post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be subscribing to your feed and I hope you post again soon.

    • admin

      Thanks. I try to publish every Monday and Thursday with additional posts on Saturdays at times.