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What’s the difference between business insurance vs personal insurance? This is frequently asked question for new business owners as they try to see if their existing personal insurance, like homeowners, will cover their business operations.

Business Insurance vs Personal Insurance

If have been thinking about starting your own business, you may have questions about the necessity of business insurance. Most people have some type of personal insurance covering themselves and the items they plan to use in the day-to-day operation of their company. As a result, investing in additional types of insurance, such as business insurance, can seem wasteful, especially for those who do not have a lot of startup capital.

However, it is crucial to explore the idea of commercial insurance, regardless of your available funds or intended industry. Without insurance, you could find yourself in an expensive situation, forced to use your savings or go into debt to salvage your business or recover assets. Learning more about the differences between the various types of business insurance vs personal insurance that are available is a great place to start.

Liability Insurance

No personal insurance plan really covers business liability. As a company, you need liability insurance to protect yourself if you are ever at fault for damages or even an inconvenience. For example, if you are running a hair salon out of your home and a customer trips on their way out, they could sue you for medical costs. If you do not have business liability insurance, you have to pay for the suit and any damages awarded out of pocket. This can bankrupt some small businesses, so be sure to get some form of commercial liability insurance.

Property Insurance

Not all small businesses require commercial property insurance, though many do. If you are a health care provider who only does home visits, you probably do not need property insurance. However, those who run brick-and-mortar businesses should always invest in commercial property insurance, giving them access to funds in the event of fire, natural disasters, or other forms of property damage.
Some homeowners have a very comprehensive homeowner’s insurance policy. If you run your company out of your home, you may think this level of insurance is sufficient. Unfortunately, if you continue to run a business or commercial operation out of your home without informing your insurer, you risk being cut off from your plan altogether. This is one area where you really need to pay attention to the difference between business insurance vs personal insurance.
Homeowner’s insurance does not typically cover commercial uses of a property, leaving you to pay for any expenses out of pocket.
You can avoid being cut off from your personal homeowner’s insurance as long as you are transparent with your insurance agent about the purposes of your home. Having an open dialogue about your insurance needs as well as your company’s objectives can help you find the best business insurance vs personal insurance coverage at affordable rates.

Auto Insurance

Many business owners use their personal vehicle for business use. You may drive to see clients at their homes or offices, or you may transport items and equipment two and from job sites. Other companies use their vehicles to deliver goods or people to and from specific destinations. In some cases, you may require additional commercial auto insurance to properly cover you, your passengers, and the items you carry.
Most personal auto plans do not extend to any type of commercial or for-profit use of the vehicle. If a collision happens and you do not have commercial auto insurance, you are stuck paying for your damages as well as any other damages or injuries that occur.
Not all small business owners need commercial auto, however, and trying to figure out which category you fall in can be complicated. It is best to speak with an insurance agent to get all the information you need. You can explain the details of your business, as well as the way your vehicle fits into your daily operations. In turn, the agent can assist you with getting the best coverage taking into account business insurance vs personal insurance.

Health Insurance

An area of business insurance that is often overlooked is the provision of health insurance to staff. Some insurance agencies offer employers discounts or deals on group insurance programs if they can get a set number of employees to participate. This is a great way to reduce your own health insurance costs, while offering the same great rates to your hardworking staff.

Business Insurance vs Personal Insurance - The Bottom Line

We hope this article on business insurance vs personal insurance has been informative. Once you have some general information about the differences between the two, you should speak with an insurance agent to find you how best to cover your company. Every business owner has a unique set of needs that can be filled with the right combination of insurance policies. Avoid feeling overwhelmed by options by booking an appointment with an agent before choosing which policy is best.

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