Are You a New Small Business Owner? Here’s What You Should Know About Liability Insurance

Are You a New Small Business Owner? Here’s What You Should Know About Liability Insurance

Sean Cooper |Jul 6, 2020

Liability Insurance for Small Business

Are you a small business owner? You’re probably well aware of the risks of property damage, but what about the liability of the goods and services you provide? This could end up proving even more costly, especially if you’re a small business.

In this article, we’ll look at liability insurance for small businesses. We’ll discuss the importance of having liability insurance, how it fits into a small business’ overall finances and risk management, other considerations, and the best policy options for small businesses in the U.S.

The Importance of Having Liability Insurance

Before we look at the importance of having liability insurance, it helps to first understand what liability and liability insurance are.

Liability means that your small business is held legally responsible to a third party, such as your customers and suppliers. Liability insurance is any type of insurance that protects a small business against lawsuits. Even if a small business isn’t directly responsible for an incident, it could still be sued for damages, injuries or losses.

For example, if a customer slips and falls on the floor and gets hurt, your small business could be on the hook for the customer’s medical bills. Other instances where liability insurance could protect your business includes advertising that does harm to a competitor, professional mistakes that hurt clients and inadvertent damage to a client’s property. Even serving up drinks at your small business’s holiday party could leave you open to lawsuits if someone were to get hurt or hurt someone on the drive home.

Finances and Risk Management

When someone, a third party, believes that they were harmed by your small business in any way, they can file a lawsuit against you. This poses a major financial risk for you and your business.

Even if you don’t come up on the losing end of a lawsuit, it could spell trouble for a business. (If you come up on the losing end, it could be even worse.) A lawsuit can create many difficulties for small businesses, which don’t typically have as deep pockets as big businesses to defend themselves.

Getting liability insurance for your small business all comes down to risk. If you don’t believe there’s much of a risk of your small business being sued, you might decide to go without liability insurance. However, most small businesses would benefit from having at least a bare minimum of general liability insurance, no matter the industry they’re in.

As its name suggests, general liability insurance protects your small business from a number of broad risks; mainly, customer injuries, property damage and related lawsuits. You may not have a choice about it; often you’ll be required to have general liability insurance before you can get a commercial lease.

Other Considerations

Liability insurance isn’t just a matter of signing up for any old policy and forgetting about it. Liability insurance policies come in all different shapes and sizes. You’ll want to shop around before deciding on the liability insurance policy that’s right for you. There are several things to consider when signing up.

The first consideration is cost. While it can be tempting to go with the liability insurance policy that costs the least, that may not be the best liability insurance policy for your small business. You’ll likely want to choose the policy that offers the best value and most protection that your small business can afford.

There are several things that can influence the insurance premiums of liability insurance: how many employees you have, your business’s location, limitations of the coverage and risk of the industry. All these factors together may explain why your small business’s insurance premiums are higher than your cousin, who is also a small business owner.

Another factor to consider is the level of protection the liability insurance policy offers to your small business. Ask yourself this question: in a worst case scenario, would it be enough to cover your losses? If the answer is yes, then you’re likely buying sufficient coverage. If the answer is no, it’s highly recommended that you consider buying more coverage.

You’ll also want to consider the financial stability of the liability insurance provider. The whole point of liability insurance is so that your insurance provider will pay out any claims you make. However, if your insurance provider files for bankruptcy when you need to file a claim, you might not end up with any payout in the end, or it could be tied up in the courts for months or years.

The Best Policy Options for Small Businesses in the U.S.

All liability insurance policies aren’t created equal. Some policies protect you against some risks, while others protect you against other risks. Here are some of the best policy options to look into for small businesses in the U.S.

For starters, you’ll want a policy that offers general liability insurance coverage. General liability insurance protects you from two main risks: bodily injuries and property damage.

Some of the most common injuries that small business owners have to deal with are slips and falls. Although it may not seem like a big deal, these injuries can be severe and costly for your business. A customer could end up in the hospital and sue your small business to cover their medical bills.

Property damage can prove even more costly for small business owners. For example, if you’re in a truck rental business and a customer crashes one of your rental trucks into someone’s property, not only could you be dealing with bodily injuries, but you could face property damage too.

Thankfully, the most basic liability insurance provides protection options in these instances, although you’ll want to ensure the coverage is sufficient for your business.

If your company manufactures and sells products, you’ll also want to look into an option for product liability. If one of your goods injures someone or does damage to their property, your small business could be held responsible.

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5 of the Best Auto Insurance Companies

Eric Bank | July 6, 2020

Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. [youmaylike] You are also covered if you cause the bodily harm or death to someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. The average annual cost for full coverage: is $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for an additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on the phone to get a quote. Sparse website when it comes to customer education. State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. The average annual cost for full coverage: is $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacements or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, The Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. The average annual cost for full coverage: is $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance is offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.

Everything You Need to Know About Filing Your Own Taxes

Katie Macomb | July 6, 2020

It's Not Fun, but It Has to be Done Benjamin Franklin wrote a 1789 letter that states, “But in this world nothing can be said to be certain, except death and taxes.” Even at the United States’ early beginnings, federal taxes were a necessary evil to fund various public projects and administrative costs. Today, federal taxes serve much of the same purpose. While virtually no one likes to prepare and file their taxes, it is a necessity if you want to avoid fines and further hassle. It is no secret that preparing and filing your taxes is notoriously complicated. Many people lament that it should not be so difficult to pay the government. However, some of the complications allow people to save money if they discover specific tax benefits. Knowing how to file your own taxes may be a good option if your tax situation is relatively straightforward, or if you are willing to learn the process. Why Do You Need to File Your Taxes Every Year? The short answer is that federal law requires that most individuals file taxes annually. Income taxes are assessed every year based on your income earned during that period. You then pay a percentage of that income to the government, less any deductions, adjustments, or credits that you qualify to receive. If you do not file (and pay) your taxes, then you may be assessed penalties and interest. The Internal Revenue Service (IRS) can even go as far as garnishing your wages and repossessing your property if you do not file and pay as required. The Benefits of Filing Your Own Taxes If you are one of the 43% of Americans that are doing your own taxes, you are certainly not alone. Roughly 53 million people prepared and filed their own taxes in 2018. There are many benefits to filing your own taxes, including: Saving money: Hiring a tax professional is expensive, and many people can prepare and file their returns on their own, completely free of charge. Control: Some people like knowing the exact information that is included in their return and being able to control the data, and for some, knowing precisely how the numbers work out, is comforting. Gain helpful information: When you prepare your taxes, you can see what items saved you money this year or which issues you should address so you can save money next year. While filing your own taxes is complicated, it can be beneficial under the right circumstances. There are several programs online that walk you through the process to help ensure you are taking advantage of all of your available deductions and credits. The Drawbacks of Filing Your Own Taxes In addition to the benefits, there are also some disadvantages to filing your own taxes. These include: Time and effort: Preparing and filing your taxes takes time and work You have to sift through financial information and deal with concepts that you may not understand well. The process can be frustrating and take a considerable amount of time. Error risk: If you do not completely understand how your taxes work, you run the risk of making a mistake because of misconceptions. If that happens, it could lead to underpayment and audits down the road. Questions: Even if you use a tax preparation software, you may still have questions that will remain unanswered unless you do significant research or reach out to a tax professional. For some people, the risk of having a substantial error that triggers the IRS’s attention is enough to scare them away from preparing their own taxes. Preparing for Filing Your Taxes When you begin work on your taxes, you should have information gathered throughout the year. Some of the most common items that you will need include: Social Security numbers for you, your spouse, and any dependents Information about wages, such as W2s or 1099s Investment income information Documents that represent any other source of income Information regarding adjustments to income, such as student loan interest paid, IRA contributions, and health savings account contributions, just to name a few Information regarding potential credits, including, for example, child care expenses, education expenses, or retirement savings contributions Data about any tax payments that you may have made throughout the year Keeping good records will help make tax preparation easier at the beginning of the year. [youmaylike] The Basics About What You Can Claim When Filing You must pay income taxes on all your income earned throughout the year. However, that income is reduced by a few things. The further you can reduce your taxable income, the less you tax you will pay. There are three general categories of tax reduction methods: Standard or Itemized Deductions Everyone can claim either the standard or itemized deductions. Standard deductions are a set amount that is based on your filing status. Itemized deductions are based on actual expenses that you incurred throughout the year. You can choose to use the higher deduction. The higher the deduction, the less tax you will have to pay on your income because your income decreases on paper. Itemized deductions include things like medical expenses, state and local tax payments, and home mortgage interest deductions. Itemized deductions will only decrease your income by a certain percentage, or up to a specific point. Adjustments Some adjustments to your income may also be available. These include things like paying student loan interest or alimony. Adjustments are more valuable compared to deductions because they decrease your income dollar for dollar. Credits A credit decreases your taxable income as well. Some credits are refundable while others are not. For example, you get a child tax credit simply for having children that qualify for that credit, but that credit will not be paid out to you if you do not have any tax obligations. On the other hand, the Earned Income Credit, which is available for low-income filers, will be refunded to you even if you do not owe any taxes. There are a wide variety of deductions and credits available. Take a look at the federal forms and related schedules to determine whether you might qualify for any of these. How to File Your Own Taxes If You Live Overseas If you earned income in the United States as a U.S. citizen or resident alien, you likely need to pay taxes on that income. This is true even if you live overseas. You can still choose to e-file or mail your tax return to the IRS once you have it prepared, just as if you physically lived in the United States. In some cases, you will be taxed on the income that you earned throughout the world. However, you may be able to deduct a portion or all of the revenue that was not made in the United States in some circumstances. Filing Online The IRS offers an online filing option that is free for individuals that have an adjusted gross income below a specific threshold. Generally, your income must be below $66,000 to qualify for this service. You can also file online by using a commercial tax preparation software. Examples of this type of software include: H&R Block TurboTax TaxCut TaxSlayer There are many programs available that will file your taxes for you, often for a fee. Knowing how to file your own taxes can be a great way to save money, but it can be tricky as well. If you want to file your taxes yourself, be sure to read the form instructions thoroughly and get familiar with various tax saving opportunities before you begin preparing your return.