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National Small Business Week good time to review insurance
BISMARCK, N.D. — With 28 million small businesses employing half of the country’s population, small businesses form the backbone of our nation’s economy. The U.S. Census Bureau reports that since 1995, small businesses have been responsible for more than 65 percent of all new jobs in America.
For the majority of U.S. start-ups, the road to success begins at the kitchen table. Today, more than half of all small businesses are home-based enterprises. And according to a 2012 survey, businesses not only start at home, they stay at home. In fact, 59 percent of established businesses in operation for more than three and a half years are based in the owner’s primary residence.
But this blurring of the lines between home and work can have costly impacts on a family’s finances. Without proper planning, especially related to insurance, even the most promising home-based business dream can quickly turn into a nightmare.
North Dakota Insurance Commissioner Adam Hamm said, “The greatest risk to new entrepreneurs is making assumptions about what is, and is not, covered by personal insurance. Unfortunately, many home-based business owners do not discover until a major incident puts their business at risk. When it comes to insurance, what you don’t know can definitely hurt you.”
To help consumers get smart about coverage gaps between personal and commercial insurance, Hamm offers the following tips:
  • Know your limits. Most homeowners and renters insurance policies only cover up to $2,500 in damages to business property within the home and $250 away from home. These policies also exclude business-related liability claims, leaving business owners on the hook for on-the-job injuries.
  • Use personal assets carefully. If you own or lease a vehicle for business use, make sure the business name is listed as the principal insured. You could be held liable for injuries or damages caused by an employee driving to conduct business, regardless of who owns the vehicle. Also, most commercial auto policies cover rented and non-owned vehicles, including employees’ vehicles driven for company operations.
  • Think about the unthinkable. If your home-based business is a partnership, be sure a plan is in place to sustain operations should one partner pass away. Key person life insurance names each partner in a business as beneficiary on the other partner’s policy. If one partner dies, the other partner can use funds to pay off outstanding loans and other obligations.
  • Understand your options. For group health insurance, talk to your health insurance agent. Businesses with fewer than 25 employees who purchase through these online marketplaces may be eligible for special tax credits.
  • Study state law. Make sure you understand how your state defines “employee” as it relates to workers’ compensation insurance especially if family members work as employees.
Not sure exactly what you need? Consider a business owner’s policy. This policy “package” typically includes property, business interruption/continuation and liability insurance, providing foundational coverage while you explore other business insurance needs.
For more information and resources visit the North Dakota Insurance Department website, www.nd.gov/ndins.

North Dakota Insurance Department
600 E. Boulevard Ave.
Bismarck, ND 58505-0320
Phone 701.328.2440
Toll free 800.247.0560
Fax 701.328.4880

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