Wednesday, April 9, 2008

Get the Goods: Commercial Insurance

I took another important step today in securing the success of my photography business by getting commercial insurance.

Many entrepreneurs make the mistake of assuming that their homeowner's insurance policy will cover damages that occur to their home businesses. But basic property insurance does not protect you from liability and property damage. Most homeowner's policies limit loss of business property to $2,500 and won't cover losses that happen away from the home. My new desktop computer and laptop computer alone cost me $10,000, not to mention what I paid for the camera, lenses and studio lighting equipment. And what would I do if a drunken guest at a wedding tripped over my tripod? The hospital bills could ruin me. So I definitely needed a more comprehensive policy.

My Farmer's insurance agent, whom I've worked with for more than a decade, reviewed different coverage options, pointing out what was covered in my basic homeowner's insurance policy and what wouldn't be. We settled on a Retail Business Owners Policy, known as a BOP. BOP covers:
professional and product liability for off-premises coverage
personal liability for bodily injuries clients could sustain when they come to my studio
fire and flood protection
computer hardware and data loss, building contents
property and equipment that is damaged or stolen
business income
home-based accounts receivable
money securities.

I could have opted for a less costly policy, but the $55 a month I will be paying will offer me a great sense of peace of mind. And in the future, I could always add riders for more coverage, including additions for signs, fences, and other outdoor property not attached to a building and intangible property (good will, trademarks, etc.) and improvements to my home studio.

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