Protect Your Personal Assets by Having Small Business Insurance
A Home Business Article Contributed by Elizabeth Fox-Wise
Many Small Business Owners Make the Same Common Mistake of Not Carrying Insurance
Start up small business typically has more overhead than they can afford, forcing the small business owner to choose not to take insurance. However, making the choice not to provide insurance for your small business is one that could lead to drastic consequences for the small business owner.
If your small business is a sole proprietorship or a partnership, your personal assets are not protected from a lawsuit against the business. Many small business owners do not realize this. They believe that because their small business does not have a lot of assets, they can run the risk of the not carrying insurance. They are holding onto a false sense of security that they "do not have much to loose".
By the time they find themselves in the middle of a lawsuit, it is too late to stop the ball from rolling. A court judgment against your small business that is greater than the total assets of the business, allows the person who won the suit to go after your personal assets to recover their judgment.
To Protect Your Personal Assets from a Lawsuit Against Your Small Business You Must Have Liability Insurance
Liability Insurance is available in three different types depending on the nature of your small business. General Liability Insurance is the most common, Professional Liability Insurance is recommended for service businesses and Product Liability insurance is for those small business which manufacture of sells product.
The most common for of Liability Insurance is General Liability Insurance. This protects your small business in the event of injury or property damage to another person.
Professional Liability Insurance protects your small business for negligence or malpractice while performing a service.
Product Liability Insurance protects your small business should a customer get injured while using your product.
Not only is Liability Insurance a lifesaver if a lawsuit ends in a court judgment against your small business, but all liability insurance policies also cover the cost of the attorney to represent your small business in a lawsuit.
If You are Running a Small Business Without Liability Insurance, Find out If You Can at Least Protect Your House
Depending on the State that you live in, you might be able to protect your primary place of residence from being able to be attached during a settlement in a lawsuit against your small business by applying for a Homestead.
This varies from state to state and you will have to check with your local authorities or town hall to see if this can be done where you live. If you apply for a Homestead against your home, then if there is a lawsuit against your small business and the judgment exceeds the assets of the business, although your other personal property can be attached, your home will not be able to be. While this is obviously not as good as carrying a liability insurance policy, at least a lawsuit will not result in the small business owner loosing his home.
