The reading level for this article is All Levels
When starting a new business, it is essential to know just what kind of liability insurance you ought to buy. This can be a tricky question as there are many different kinds of liability insurance, and each of them comes tailored to specific kinds of industry, and you have to adjust what you need based on your own personal risk tolerance and the specifics of your situation.
Let’s say, for example, that you need to purchase liability insurance for handyman business. Well, there is likely to be a state mandated minimum as to how little you need to purchase as far as general insurance goes, but depending on the specifics of your situation, you may want to ask yourself whether that quantity is going to be sufficient to meet your needs. An important thing to consider is the area in which you are going to be working; if you are going to be working in a wealthy area, the risk of property damage is significantly higher; you will both be dealing with more expensive property to ruin, and will probably be working with clients that have a better knowledge of the legal system in the event that things go wrong (luckily, you will probably be making this up easily in your rate). Accordingly, you may want to consider the worst thing that could reasonably be expected to happen, depending on the nature of your trade; if you are a detailer or do minor carpentry work, the risk is much lower than you would face as a plumber or electrician. Of course, unless there is a risk of fire being brought to the property or otherwise destroying it altogether, it wouldn’t make much sense to buy liability insurance for handyman business in the amount of the average property you intend on working on.
Another important thing to consider is the quality of the insurer. You may want to research them on JD Power and Associates or your state’s Department of Insurance so that you know that you will not have to deal with lateness or possible legal issues when it comes time to pay out. Luckily, insurance for handyman business is a fairly simple procedure; insurance for a professional firm, for example, is likely to be much more involved.