you're gonna hear about Topics that are important to the home business community and today we want to talk about insurance all right.
How do we get here, so I called my insurance to ask about one thing and got completely educated on a whole bunch of other stuff? So now I'm, bringing it to you, okay, so I want to really talk about it. You know the five types of insurance that every business owner should have there in no particular order of importance.
Yeah, perhaps maybe a little, but this is everything that you should have as a home business owner. So number five is general liability insurance. Now general liability insurance covers you. If you see clients at your home, you could be a dentist.
You could be a hairstylist. You could be a barber if you operate a business out of your home and you see clients out see clients at your home general liability insurance is a must for you. This is what covers you if someone gets injured on your property now, some, if it's wintertime somebody slips and falls and breaks their foot on some ice or if they come into your place of business at your home, they slip on A wet floor or something, and they want to sue you.
This is what general liability insurance covers for you. Okay, so if you see clients at your home, especially, you need general liability insurance, all right number, four, professional liability insurance.
Now, this is also known as errors and omissions insurance. This covers, if you make a mistake on the job, if you are a hairstylist and your client gets, you know a chemical burn or if they want to sue you for a bad haircut or even tax professionals.
We make mistakes too. I realize we do try to be perfect, but we make mistakes too right so that's. What professional liabilities and professional liability insurance covers. If you make a mistake on the job and someone was to come for you and sue you for that, that's.
What professional liability insurance does? Okay, number three property insurance, okay, so property insurance covers the dwelling and contents now for home business owners. You what you want to do is you want to make sure that your homeowner's insurance policy covers all of your structure and all of its contents to include the things that you use to operate your business, whether that is a computer like I said, If you & # 39, ve got.
If you are a dentist, you got tools. If you are a doctor, you got tools, you know everybody that has some sort of. You know particular tools where this computer curling iron, whatever right microphones, does yours? Does your insurance cover that, if not, you may need to get some type of separate property insurance to make sure it's covered now? If you have a standalone facility, you may have more commercial insurance, but for my home business owners, this is where you want to make sure that you're covered.
You know your dwelling, as well as the contents that are in you, know in your home office. Okay, some people can take you to know, take a home off, take a bedroom and convert it into a home office, but there are also people that build additions onto their home for it to be their home office as well.
So you got to make sure that you're covered with that all right. All right number two is keyman insurance, okay. So now the thing about keyman insurance is this: you know for home business owners. The key man is generally us.
Okay and you know, and so then, if something happens to you, what's going to happen to your business, especially when we're talking about this business, really supporting your family and supporting your life? What came in insurance is that that key person could be an employee.
It could be yours, you know themselves whatever and corporations do this as well. They cover you know they have an insurance policy for the key person in their business, and the company is generally the beneficiary of that insurance policy.
Now the thing about keyman insurance is this: it is not tax-deductible, the premiums, although it may be a business expense. It is not tax-deductible, also. The proceeds from that insurance policy are not taxable income as well.
So, yes, you should have some sort of keyman insurance policy or you know, even just making sure you have life insurance, okay, but keyman insurance is usually paid by the business code to cover and employee and the business is the beneficiary just remember it is not Tax deductible, okay and then the number one type of insurance that you need to have is cyber insurance.
Okay, I'm, going to spend a little bit of time here, because um cyber insurance is fairly new when it comes to hitting the streets about. You know types of insurance that you should have, but if you especially my e-commerce people, my internet marketing people, if you sell online products, if you got a Shopify store if you keep all of your clients, information on a computer or somewhere.
If you got contacts in your phone - and these are we're talking about business context, you need cyber insurance because data breaches are or are becoming the norm right. We've had them, you have the Equifax you had Lord.
I forgot the other folks who don't have so many of them, but these, but these data breaches are becoming the norm, so it's, not a question of if but when, and so with you know, with these cyber insurance, you know there are some things that you have to have in place.
You have to have a data security plan. You have to have you know a data response, a data breach response plan. You need to have these things in places, so what your cyber insurance does is. It covers you and these costs related to a data breach.
I just saw a statistic that showed for 2019, the N 2019 ain't even over with yet yah, but in 2019 the average cost of a data breach is a hundred and fifty dollars per record. Now, what constitutes a record? A record? Is any information that you have so and, and I've, actually talked to my cyber attorney? There are attorneys that specialize in data breaches y & # 39, all okay.
So with this attorney, he was saying any information that you have constitutes a record. So if you have a phone number, if you have an email address, if you & # 39, ve got social security numbers. All of these things count as a record, do you think about all the people that are on your phone.
You know-how are with these social media sites, they want to integrate your your your contact list with your Facebook and all of that all of those are all separate records. Okay, and so can you imagine having to pay a hundred and fifty dollars out of pocket to every single contact you have, I mean, even with the Equifax data breach right.
Everybody was hopping on to get that 125 dollars. Well, there was only so many people that can get that 125 dollars, so folks might not even be getting that much, but cyber insurance really is important if you are doing business on this Internet and because we are, you know such where we've Gone global: we really are a global society.
Now you think about how many people that you deal with worldwide people that buy from you people whose phone numbers emails. All of that that you have to contact every last one of these people that say that you had a data breach, so cyber insurance, I'm telling you you need to get that in place, because the cost of investment is definitely worth The money that you're gonna have to payout.
If you don't have it now, although I thought was my number one, I'm gonna give you a bonus one, because this is something that you also need to know about what I called my insurance company for was for the Business interruption, insurance and what that is, that's when your business has to shut down.
So let's, say for a natural disaster or something you know. We're, starting to hear more as more about hurricanes and all that stuff. So business interruption is when your business is shut down due to some natural disaster or whatever you might have a fire.
You might have a natural disaster, so you know something like that now I do believe I saw where it doesn't cover flood so that so that's, one of the things that you know. I definitely have to go back and check on, but anyway, here's, the deal home business owners don't qualify for business interruption insurance, so you got to have a plan in place home business owners.
If something happens, if my house caught on fire today, how would I rate my business, because this is an ER? We don't qualify for business interruption insurance? If you have a standalone business, then that qualifies for business interruption insurance, but not a home business owner.
So now you have to start thinking in terms of you know like I said if your house catches on fire today, how would you continue to operate your business? What would be the plan for to you know to still provide revenue for your business? You know this is how your family eats.
You know how are you still going to operate, so that is so. That was the aha. That was the reason for me, calling my insurance company anyway to find out about business, interruption insurance, and to be told that I don't qualify for that.
That was kind of like a man. You know I felt like wow. That was, it was just one of those things I like. How could I not qualify because I have a business but because it is a home business I don't qualify so um so yeah, so you guys so now in my own planning.
I'm thinking now in the most disastrous terms. If, if I poofed something happens, how am I going to continue to operate so now? I have to put that plan together and I highly highly highly encourage you to do that, because that is what we want our business is to do.
We want our businesses to support our lifestyle to be able to pay the mortgage and rent, and you know all of that stuff right but yeah. But if you don't have that business interruption coverage. What are you going to do if you suddenly shut down today for an indefinite period of time? How would that work? Would you be out of business? How's that gonna work? Okay? So if you think about all the data and stuff that you need to back up in order to have access to certain files or something like that, these are all the things that you need to take into consideration.
If you know like, I said something happens and you were suddenly shut down today, how would you pick up the pieces and move forward alright, so that is it you guys for today's, episode of home biz tax talk again.
We air Monday, through Friday, 9:00 o'clock ish and you can come right here then get your questions answered about your home business taxes alright, have a great day, and I will see you all next time.