INSURANCE GUIDE: Liability Insurance For The Self-Employed – The Self Employed

Brian Winch | June 06, 2016


You’ve discovered self employment to be both personally and financially rewarding. Your simple parking lot litter cleanup business has turned out to be a great source of income. You were able to start part time, with little money, based from home, and after only little more than a years time you quit your job to operate your business full time. You’re thinking life has never been better.

Then one day you receive a phone call from an insurance company. They would like to meet with you to discuss a slip and fall incident that occurred six months ago at one of the properties you’re contracted to provide litter cleanup. You feel sick. You thought you didn’t need insurance yet. None of your clients had asked you for proof of insurance coverage after initiating contracts. What could possibly happen that would make you require insurance?

It turns out a lady slipped on a banana peel that someone had discarded in the parking lot outside the health club at your contracted property. She broke her ankle and is suing for damages. Her insurance company has contacted the property owners insurance company, who is now wanting to involve your insurance company. This is a rare scenario, but it doe’s happen. Without insurance you’ll have to pay the cost of defending yourself in court. Yes, you have a contract that states you provide daily litter cleanup. You know you cleaned up that banana peel. In fact you clean up several peels from that same spot, probably from the same person who thinks the parking lot is fine to throw trash on. But you don’t have insurance so you’ll have to hire a lawyer to prove that neither the property owner or your company is negligent, as a contract is in place to clean up possible slip and fall hazards. Should the case go to court and the judge decides in favor of the injured woman, you’ll be held liable for her medical bills and other awarded expenses. You may also lose your customer.

Don’t let this possibility happen. Comprehensive General Liability Insurance (CGL) covers you in case someone gets hurt and the cost of your legal defence in that case. It’s a cost of doing business and as such is a business expense. Contact an insurance broker to shop for the best insurance coverage. I’ve found my clients require that I carry $5 million coverage. It’s important that your business be properly classified. In the case of my commercial litter cleanup business, I’m not operating any power sweepers so I don’t want to be classified as a sweeping/parking lot maintenance contractor. I provide a service on foot (walking) with simple, inexpensive hand tools. Getting a proper industry classification will result in a more affordable insurance premium.

I found a great article written by Marshall Lee. He further makes a case as to why insurance for the self employed is so important. neglecting to insure your business you are risking not just your income and your livelihood, but also your assets and your ability to earn money now and in the future. Read more…


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