Business insurance ideas for your own independent business
Obtaining business insurance for your enterprise can seem daunting. But it’s usually a one-time navigation until finding a perfect policy match, which then only needs yearly checking up on and tweaking here and there when the business makes changes or new laws change the terms. Here are observances of how others have gone about securing business insurance, in some cases for as low as $75 a year, or even no cost to themselves.
Business insurance for hosts. If farmstays or country B&Bs are your business dream, and you plan to connect with AirB&B or Vrbo, they offer host liability insurance at no extra cost. AirB&B may include primary liability insurance while hosting guests from their platform, and also offer a separate and additional policy for loss or damage to the host’s own property. As with everything discussed here, one should have their own insurance advisor look over the terms, including making sure their current insurance allows them to use AirB&B as their primary insurance first. Same with Vrbo (Vacation rentals by owner). No cost for customers who book your place through their platform. At this writing, they offer a million dollars liability either as stand alone insurance if you don’t have any, or in addition to insurance you already have. Other such platforms may offer something similar. Realize, though, that customers must sign up through their platforms for their business insurance to apply. You can't sign up for their platform, then host your cousin's friends through word of mouth and expect them to be covered. This can be to your advantage if you don't like your cousins friends. "Sorry, my insurance won't allow it."
One-time event insurance endorsements (also called insurance riders) from the business owner's own current insurance can be one-time add-ons or expansions to their current regular business insurance policies for a one-time fee that can sometimes save money over getting a completely separate business policy or paying for insurance for a business project such as a festival year-round when the festival only happens once a year. Business owners embarking on a new venture into holding a weekend festival for the first time can check to see if their current business insurance endorses only a very limited number of onsite customers year-round, and see if they can purchase a one-time rider to allow coverage for up to (for example) a hundred customers a day only for one weekend. That would be a one time low fee that leaves their premiums the same for the rest of the year, when coverage for that many customers isn’t needed year-round and there’s no need to pay for it.
Riders provided by the customers. If the landowner earns income by renting out property for non-commercial gatherings such as weddings or family reunions, the landowner can require the customers to provide proof of an insurance rider the customers can get off their own personal policies for a one day event (or possibly two day if there will be rehearsal dinners held there). If done properly, they’ll pay a small fee to their own insurance company (such as $75), for possibly up to a million dollars or more for the day, which would kick in ahead of the landowner’s own insurance. Usually one person representing the bridal party or family takes out the rider. This is done quite often by rental facilities, though on occasion, there can be a customer’s insurance company that’s unfamiliar or reluctant. Landowners renting out their property state how important it is to see proof of the rider far ahead of time and be satisfied it’s for the proper amount and know that the landowner’s own insurance will allow the customer’s rider to cover expenses first, before all the future customers’ invitations have been sent out and plans have been made. Sometimes, the customer’s insurance company will call the venue itself to make sure they’re getting it right. In one situation, a confused insurance company had to be called by the rental property owner to explain to them what this type of rider was. Also, from the customer’s end, they can’t be earning income themselves for this particular type of rider off their own personal insurance. But if they have a business and have business insurance of their own, and want to rent your beautiful property to teach yoga or fitness workshops, there may be a rider available to them in a similar manner (see below), but for their business vs. themselves personally. Look closely at these, of course, like with any business insurance policy. Some people operate their businesses in their own names, others operate under a business name such as Gretta’s Great Yoga, LLC. Make sure the policy they think will cover them and you, really will do so. And if you want it to cover a minimum of one million dollars, make sure it does. There are riders like this that cover less, such as $350,000, which saves the customer a few dollars in purchasing. Many insist on at least one million.
Somewhat related to the above, there may be potential customers for you who do operate commercially who could contribute business liability insurance of their own. Let’s say you want to create a beautiful destination on your acreage for massage therapists to rent out. Massage therapists themselves can get liability coverage for their own business through their associations that applies no matter where they work. Business owners who operate such rental facilities can make sure the renter’s own business insurance is in place and would protect the landowner of the rental facility, including other incidentals, such getting hurt in the driveway on the way to the building where the massage room is set up or falling off the massage table. If a massage client trips over the rug in the massage room and sues, whose insurance pays? Be sure to know and be satisfied with the answer.
Special liability immunity laws for specific types of activities on your land in certain states can shield some such businesses to some extent. See what’s available in your state if this applies to your business. Look closely at these, though. They’re often for specific activities like u-picks, but not for just anything that could happen on a property such as falling into an unmarked snake pit on their way to the berry field. They don’t protect from negligence or very aggressive attorneys looking for loopholes. For example, if Sam’s state has a “recreational user statute” that helps shield him from liability for a recreational business on his land, that doesn’t mean Sam would be shielded from allowing paying customers who’ve never been around large animals before to enter a closed arena alone with Bullet, his angry new bull, to try their hand at bullfighting, just because Sam thinks that watching them would be recreational. Also, be careful of immunity laws set up only for homeowners but not for home businesses. Such as immunity from equine liability for personal use horses, but not for when customers pay to ride or be near the horses. Or on the other end, they may not shield a part time or smaller business, only larger full time businesses that qualify as commercial businesses.
Agritourism specific business liability insurance. If regular business insurance is already in place, it may still not cover onsite customers and may even restrict them. If the addition of onsite customers is now about to be implemented for the first time, a customized agribusiness amendment and rider can be looked into. For insurance companies that offer these, the good ones understand that agritourism is a supplemental income to the producer’s regular operation. Their coverage and cost can reflect the specific business whether you plan to try out a flower arranging workshop each weekend for the month of June, or plan to open the floodgates to the general public 365 days of the year.
One-time special events insurance from companies separate from the customer’s or business owner’s regular insurance. These can be for both private and commercial events. Their one-time fee appears to cost more than a customer or business owner’s one-time fee for adding a rider off his or her own current insurance. But they could come in handy for several reasons. If the current business insurance is reluctant or isn’t responding to the business’s need for a special event’s coverage in time, these can be a plan B for some people. Also, it can be handy to have the names of good ones on hand, especially if the business involves lots of special events over the year and all customers are required to provide their own insurance riders for the events. There will inevitably be the ones who have already sent out invitations but “forgot” or discover their insurance refused the rider and then try to pressure you to take the risk for their event anyway. People who have used these separate one-time special events insurance policies have said they can be purchased up to the day before the event. That gives the customers another option and no excuse that their own insurance didn’t come through. In our humble opinion, no landowner or business owner should take the risk of an event without coverage.
Waivers, signs and fencing. The type of business owners we know who succeed with signs and waivers to shield themselves from liability don't assume if they replace good business insurance by scribbling, "No matter what happens to you it's not my fault" on a piece of notebook paper and tape it to their screen door, that they're covered. In general, properly worded and signed waivers, and properly worded, easily read, and properly placed signs seem more to supplement insurance. Or to even allow the business owner to get business insurance, perhaps at a lower price, where otherwise without them, it wouldn’t be offered to the business owner, or would cost more.
Still, some eco producers in some states have been surprised at how helpful properly worded and executed waivers, signs, and fencing can be in the right circumstances along with compatible business insurance. Some business owners even put the option of an online waiver on their websites so customers can print it out and bring it already filled out, making sure it’s very clear they can’t just fill it out online and leave it at that. They have to print it and bring it in (options of getting forms and filling them out at the business are always a good idea for would-be customers whose printer is currently out of ink or who aren’t that savvy with technology). Unless of course it specifically is a digital waiver meant to be signed online – though it still seems to be a good option for physical waivers to be offered at the business as a choice. Some would-be customers may be leery of signing anything online and feel much safer doing it the old fashioned way. No surprise, even digital smart waivers for mobile devices may be available.
And in turn, waivers can sometimes do for the business owner what business insurance can’t do. The insurance covers the insured losses including liability claims, but the waiver shifts the liability away from the business owner and his or her business insurance altogether. Yet, unforeseen circumstances can still override the best of intended waivers and such, which is why partnering them with business insurance back-ups can be needed. As one attorney warned us, even the best waivers won't dissolve gross negligence or purposeful misconduct. A business owner can't entice people onto their land, have them sign a waiver acknowledging they understand this is a working home business with equipment that may be sharp or rusty, and campfires for warming themselves, then hand out hard liquor to the kids or forget to mention areas of quicksand that aren't fenced off. There are online waiver forms for exploring the correct wording, but specific advice just for your situation may be best. You might want to start by getting free attorney advice, at least at first. Score.org offers free legal advice to small businesses, and may be able to further help with business risk management such as wording of waivers, placement of signs, etc. Or, they could at least point you in the right direction for further hired legal assistance.
A local claims defense attorney, especially one that specializes in prevention for landowners, may also have ideas to consider even before contacting a business insurance agent or broker to see what might be involved before going even further with the business idea. For example, local laws on liability tend to change over the years, and are often hard for the layperson to decipher, yet alone find. In some cases, proper fencing may eliminate or at least reduce certain liability in certain locations, while not in other locations. And the definition of proper fencing may be specific or not, such as how close to the ground and how high up from the ground its minimums are. It could be that in your county, if you keep records of regular fence installment and maintenance, that could help in a case where your customer’s son, Bret the Perpetual Threat, cut a hole in your fence while everyone was distracted, through which the pigs promptly escaped and destroyed your neighbor’s new landscaping. It could help prove it didn’t happen because of your negligence. They may also know if proper signs, such as clearly read warning signs, placed in specific locations could shield from liability, whereas improper signs or even proper signs placed in the wrong location may not help at all. At least you’ll have somewhat of an upfront idea of what’s expected before going forth in your business. Your insurance company itself (realize they have defense attorneys of their own who can be very helpful) may still have a few more requirements specific to their company that are relatively easy to conform to (such as putting a fire extinguisher in your barn, or a “watch your step” sign in a certain area of your home).
Some other types of hired attorneys may be of help beyond business insurance. An asset protection attorney may give ideas, such as placing your business and/or some or all of your property into a limited liability company (LLC). Be careful, though. There are many confusing and exaggerated claims offering business liability protection, as well as scams. Putting assets in a revocable trust doesn’t, according to most good attorneys we’ve spoken to, stop lawsuits against you. Yet there are those who say it does. Putting some assets into an LLC could possibly be of help, but only if the owner of the LLC uses and treats the LLC properly. Make sure any attorney tells you how it should be used and treated over the years so it holds up if the time comes when it’s needed. There are also asset protection attorneys who specialize more in people with multi-millions or more who feel they are targets and will go to far ends to protect their assets. They can scare us normal folks into thinking there are people waiting to sue us hiding in every closet, under our beds, in the attic, lurking in the outdoor garbage can and no matter which booth we choose at our local cafe, there will be one under its table. So be aware. Yet don’t settle for anything less than what really protects you and brings you peace of mind. Losing one’s home and generational acreage to a slip-and-fall that could have been easily insured is also quite devastating. Or even if the home property isn’t lost, the business could have to close down. It does happen to businesses because of liability loss. But as you proceed, remember there are people happily and safely and prosperously operating insured businesses similar to yours across the country. And have done so for decades, if not generations.
People buy an umbrella policy to increase liability coverage beyond their underlying policy. For example, someone might pay an extra $200 a year to increase their current liability coverage from half a million as it already is to two million. But for it to cover business related losses vs. just personal losses such as someone’s teen at fault for a family car accident, some advisors report that an existing business endorsement or policy must already be in place. Umbrella policies are often offered by the same companies that we use for home and business insurance. It appears to be rare that one can find a separate insurer that deals only with umbrella insurance.
Disclaimer: Remember we’re not professional financial or legal advisors and are sharing layperson observances of what has been reported and shared by others, and some of our one experiences as well. Seek your own professional advisor before making any final decisions.