Business liability questions

[mccannable]

I am price shopping for liability insurance for my wife's photography business. I have done some research but this forum has been helpful on my many other questions. We are looking for basic liability mainly for our home studio because she is shooting kids and infants. We will also get on location just to cover ourselves. We do not need equipment coverage as she rarely has more than a few thousand dollars worth of gear with her at a time. As of now we are not looking for e and o insurance either, she is just starting and to my knowledge the most she can be out on lost product/images is what the client payed. So any advice is always appreciated.

[Whostheboss]

Does your home insurance offer anything for people who run business from their home?

[Whostheboss]

I have a sole-prop. and my equipments are covered by my home owner ins. I know you didn't as about equipment but i would think your home insurance should have something.

[Blaster400]

It's all about your risk tolerance. Find a good insurance broker and just buy the insurance coverage you need to sleep at night. Personally, I only insure for catastrophic losses with my business.

The first think you should do is investigate if your homeowner's policy will insure her when doing work inside your home with your existing coverage.

[Biorin]

Originally Posted by Whostheboss

I have a sole-prop. and my equipments are covered by my home owner ins. I know you didn't as about equipment but i would think your home insurance should have something.

Why are you running it as a sole prop.?? So much liability

[kprocivic]

Originally Posted by Biorin

Why are you running it as a sole prop.?? So much liability

it's easier.

[Biorin]

Originally Posted by kprocivic

it's easier.

It is a bit easier, although having people come after your personal assets isn't quite as easy.

[Mr Tonka]

Originally Posted by mccannable

I am price shopping for liability insurance for my wife's photography business. I have done some research but this forum has been helpful on my many other questions. We are looking for basic liability mainly for our home studio because she is shooting kids and infants. We will also get on location just to cover ourselves. We do not need equipment coverage as she rarely has more than a few thousand dollars worth of gear with her at a time. As of now we are not looking for e and o insurance either, she is just starting and to my knowledge the most she can be out on lost product/images is what the client payed. So any advice is always appreciated.

Contact Sihle Insurance group. They are a broker and will tell you what you need and find it at the best price. They have an office in Orlando as well.

http://www.sihle.com

My agent at Sihle is a childhood friend of mine. He has nothing but good things to say about Sihle. All the agents are owners, so any agent your dealing with want's to service your needs. You might be able to shop on your own and find a cheaper policy. But it's likely that policy doesn't have you covered the way you want it to, or the way the provider makes it sound.

[Whostheboss]

Originally Posted by kprocivic

it's easier.

Yes it's easier come tax time.

Originally Posted by Biorin

Why are you running it as a sole prop.?? So much liability

I've gotten several advices warning me to convert into LLC asap.


But for OP, Yea that Sihle reference looks solid and legit.

[kprocivic]

I'm a business banker, I'd say 75% of my customers are small business which don't need lending.

[Biorin]

Originally Posted by kprocivic

I'm a business banker, I'd say 75% of my customers are small business which don't need lending.

If this is in response to the liability thing, lending ain't the only concern.

[kprocivic]

Lending and taxes, I'm not sure what else your referring to. For most people sole prop does exactly what people need it to do. Keep income seperate.

[Mr Tonka]

Originally Posted by Mr Tonka

Contact Sihle Insurance group. They are a broker and will tell you what you need and find it at the best price. They have an office in Orlando as well.

http://www.sihle.com

My agent at Sihle is a childhood friend of mine. He has nothing but good things to say about Sihle. All the agents are owners, so any agent your dealing with want's to service your needs. You might be able to shop on your own and find a cheaper policy. But it's likely that policy doesn't have you covered the way you want it to, or the way the provider makes it sound.

Yeah, i'm cool enough to quote myself. lol

But to add to this about liability, not all policies are the same. I'm about to sue a GC for a installing a faulty roof. I'm suing because the GC didn't get the sub's insurance and the GC's insurance as it turns, out doesn't cover him for any work completed by a subcontractor. May be greek to OP, but what that means is the GC bought that generally liability policy to protect him from this very situation and the insurance provider sold him a policy that on the surface looks and sounds like he's protected, but he is not.

The devil is in the details, you want someone who knows where to look for the details when it comes to business general liability.

[Maestro]

As others pointed out, find a local broker, tell them what you need to do and they can advise you on what it best for your situation.

Also, if you are running a business you do not want your home owners insurance covering any part of your business, especially if the business is set up as a LLC. You want to keep everything separate as best you can.

You want you personal stuff separated from your business stuff as much as possible because if someone is coming after you they want it all and any links between person and business assets becomes fair game.

[Biorin]

Originally Posted by kprocivic

Lending and taxes, I'm not sure what else your referring to. For most people sole prop does exactly what people need it to do. Keep income seperate.

Originally Posted by Maestro

Also, if you are running a business you do not want your home owners insurance covering any part of your business, especially if the business is set up as a LLC. You want to keep everything separate as best you can.

You want you personal stuff separated from your business stuff as much as possible because if someone is coming after you they want it all and any links between person and business assets becomes fair game.

This. If anyone sues your business or comes after you in any way with a sole proprietorship, they can come after you for everything you're worth. With an LLC, worst case your company goes bankrupt, but you've still got everything you have. Tax rates are typically more favorable as well.

[kprocivic]

Yea I know the differences in business entities. I agree with what you guys are saying, I just think that most small businesses liability is low. It also depends on the business type. Some businesses are very high risk and yes you would want to be an LLC. Someone who sells avon does't need to be a LLC vs a Licensed landscaper.

[schoy]

First, many homeowners policies will not cover the liabilities of a home business. It MAY (or may not) cover the business equipment. Hence, it might be a good idea to obtain separate a CG policy. Professional (or E&O) insurance isn't necessary since you aren't giving professional advice.

Second, I agree with others in that you should consider forming an LLC, to at least protect your personal assets from business liabilities. The liabilities we're talking about is if someone gets injured in the course of your photography work (say, a child falls from the chair you put him/her on or one of the flash-stands falls on someone (and burns them or electrocutes them or ...)). And the extra cost to form an LLC and additional tax return hassle is quite minimal. However, a caveat to this: You'll need to take steps to completely separate your personal stuff from your business stuff (different insurance policies, different bank accounts, separate stationery with LLC letterhead, business cards with LLC name, a defined office-space, etc.); otherwise, you may lose this protection (look up: "piercing the corporate veil", which applies to LLCs as well).

Note that in FL, you probably don't get charging order protection (which protects your business assets from personal debts), unless you get someone else to own a portion of the LLC (even just 1% could help).

* The above does not construe legal advice. Consult your attorney.

[mccannable]

Thanks. It is a sole prop for simplicity and cost. It's a very low risk business but we still want liability coverage. We will most likely transfer to llc if things pick up. Homeowners will probably cover gear if it's not lost during business use And they do not cover home business.

I have been working with a few loca agents just always welcome some unbiased advice.

I will call the insurer mr tonka linked too Aswell.

Thanks for the advice.

The quotes have been from $350-550 for 1-4 million in coverage. The $350 quote was online and I need to follow up to verify some details.

[mccannable]

Originally Posted by schoy

First, many homeowners policies will not cover the liabilities of a home business. It MAY (or may not) cover the business equipment. Hence, it might be a good idea to obtain separate a CG policy. Professional (or E&O) insurance isn't necessary since you aren't giving professional advice.

Second, I agree with others in that you should consider forming an LLC, to at least protect your personal assets from business liabilities. The liabilities we're talking about is if someone gets injured in the course of your photography work (say, a child falls from the chair you put him/her on or one of the flash-stands falls on someone (and burns them or electrocutes them or ...)). And the extra cost to form an LLC and additional tax return hassle is quite minimal. However, a caveat to this: You'll need to take steps to completely separate your personal stuff from your business stuff (different insurance policies, different bank accounts, separate stationery with LLC letterhead, business cards with LLC name, a defined office-space, etc.); otherwise, you may lose this protection (look up: "piercing the corporate veil", which applies to LLCs as well).

Note that in FL, you probably don't get charging order protection (which protects your business assets from personal debts), unless you get someone else to own a portion of the LLC (even just 1% could help).

* The above does not construe legal advice. Consult your attorney.

All good advice. I owned an auto repair garage and had it set up as an s Corp. we consulted with an Attoney and quality accountant to keep the "corporate veil" safe. I know llc is much easier but for this first year or so we are gonna run the risk, minus instance.

[schoy]

Originally Posted by mccannable

All good advice. I owned an auto repair garage and had it set up as an s Corp. we consulted with an Attoney and quality accountant to keep the "corporate veil" safe. I know llc is much easier but for this first year or so we are gonna run the risk, minus instance.

Sounds like you've got the right people consulting you. Hope your wife's photo business turns out well. And feel free to share some of her work (say, on the photography sub-forum, properly watermarked of course).

[RickFLM4]

As others have stated, any small business insurance broker can help with liability insurance. Shouldn't be that expensive.

With respect to LLC vs sole proprietor debate, setting up an LLC that is disregarded for tax purposes is very easy to do yourself and doesn't change use of Schedule C for taxes, while providing legal liability protection. Even in a low risk business, no reason not to take this simple step.

[Maestro]

Originally Posted by Biorin

This. If anyone sues your business or comes after you in any way with a sole proprietorship, they can come after you for everything you're worth. With an LLC, worst case your company goes bankrupt, but you've still got everything you have. Tax rates are typically more favorable as well.

Generally speaking this is true, however, there have been a number of court cases to piercing the LLC corporate veil and they using the connection between members and LLC assets as way in. Thinking you are 100% protect is not true anymore. This advise came from a lawyer who I know who is familar with this stuff and gives good advise.

http://www.nolo.com/legal-encycloped...eil-33006.html

http://www.forbes.com/sites#/sites/j...n-greenhunter/

There are other cases like this, most found in favor of the LLC, but cracks are happening and those who do not do the right things run the risk of loosing what the LLC was design to protect against. Every case makes it easier for the next and most People running their own business usually do not separate personnal from business all that well.