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Don't forget your small business insurance

Discussion in 'Asset Protection/Taxes/Legal' started by MJ DeMarco, Jul 20, 2017.

  1. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Admin Post
    Forum peeps,

    For all of you engaging in any type of business that has some type or risk, especially personal products and consumables (I'm talking to YOU supplement guys) do NOT go without business insurance. Without it, you are gambling.

    Over the years there have been dozens of posts here inquiring about insurance, do I need it? Where do I get it?

    Well, there are two great sources for getting quotes on business insurance - and I have experience with both of them.

    1) HISCOX: In my early web days when I ran a ground transportation business (big RISK!) I used HISCOX which is now an affiliate advertiser here. For a small business insurance quote check them out.

    B) Another great source is BizInsure.com -- which offers a wide variety of plans for a variety of fields, including contractors, freelancers, and authors. (I use them as well.)

    The price on getting insured has really come down as well -- when I got started years ago it was thousands of dollars per year -- it is much cheaper nowadays as the web businesses have become more common.

    Happy hunting.
    MJ
     
  2. Bellini
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    Bellini Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    And lest we forget.....

    Hanover vs. Vemma in the U.S District Court of Arizona.

    Even if you DO get insurance, read the fine print and ask questions about your business liability insurance. Ask about clauses and exceptions, etc.

    Vemma's liability insurance covered legal defense fees (many do) and when it came time to pay up, Hanover Insurance tried to bail out and would not pay. Then they sued Vemma, adding yet another lawsuit and raising Vemmas and the owners legal defense fees even more (Owner B.K.'s insurance policy covered both him as an individual and the company separately)

    He had been paying premiums to Hanover since 2011. When the time came in 2015-16 that he actually needed his insurance policy to help him, Hanover tried everything they could to get out of paying.

    Luckily the Judge ruled mostly in Vemma's favor on this, but only after a long hard struggle.


    source: Justia Court Documents
     
    Last edited: Jul 22, 2017
  3. fhs8
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    fhs8 Bronze Contributor Speedway Pass

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    Just another business insurance horror story I have to share.

    There was a sandwich shop in the same strip mall that I used to worked at. It was thriving and there was usually a line out the door. 4.5/5 on Yelp with hundreds of reviews. Then one day when going to work I saw that the sandwich shop had a fire and the whole place was basically destroyed. I talked with the owner and he said that there was a fire that occurred overnight since a stove was accidentally left on. A few weeks later I noticed that no repairs were done really and the owner said that he is waiting for the insurance company to pay. A few months later and he told me that he's going to court to get the insurance company to pay.

    I don't know what happened next but a year later it eventually got remodeled and an ethnic restaurant took it's place.
     
  4. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    I obtained a very costly opinion from a high priced lawyer specializing in product liability and it was well worth the money.

    Briefly, the three major points were:
    1. Insurance does not absolve you from responsibility to take every possible care.
    2. Even the best insurance can fail you, so you should take steps to quarantine your assets from possible successful claims.
    3. Never put yourself forward as an expert.
    Walter
     
  5. Dark Water
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    Dark Water Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass Summit Attendee

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    A lot of people here are running service businesses with small scale, for example, those who have been inspired by @Fox and getting into web development. Throwing this question out to anyone, because I think a lot of forum users are probably in this situation: if someone is starting out and getting 1-2 new clients/month and making websites for them in the $500-$1500 range, what premium do you put on:

    a) Insurance
    b) Recording Phone Calls
    c) Contracts

    Others could be freelancing through copywriting or managing social media for some local businesses. How important is it to protect yourself in these scenarios?
     
  6. Azure
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    Azure Perpetual Motion Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    SquatchMan and amp0193 like this.
  7. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    In effect you divest yourself of all valuable assets by whatever means your lawyer and/or financial adviser recommends.

    In most cases that will involve setting up trusts. Some people manage to retain control but that needs to be done very carefully. Offshore banking can be risky these days.

    I would not attempt doing any of this without very sound legal advice.

    Walter
     
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  8. OldFaithful
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    OldFaithful Gold Contributor Read Millionaire Fastlane Speedway Pass

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    I think @Azure may have been referring to this:
    I have my own opinion on this, but I'd prefer to hear yours. Thanks.
     
    Last edited: Jul 24, 2017
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  9. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    Thanks for pointing out my little slip.

    Regarding #3, my lawyer pointed out that if you claim to be an expert you can't at the same time absolve yourself from responsibility to those who might rely on, or say they rely on, your advice. His reasoning was that your claim to be an expert is what induces a person to buy your product or service.

    Walter
     
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  10. Walter Hay
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    Walter Hay Legendary Contributor Speedway Pass LEGENDARY CONTRIBUTOR

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    I need to elaborate on #1. The legal requirement of duty of care can include being sure that your product has all legislatively required certifications. You need to bear in mind that such certificates can easily be forged, and often are.

    In my sourcing book revision due for release in a few days, I now have a 2 1/2 page chapter dealing with certificates, and here is an extract that should be considered by anyone who is selling any physical product:

    "If you import products that require certification, and one of them causes a fire, or injury etc., if
    you can't provide the correct certificates, you could be liable to fines and in rare serious cases
    even imprisonment. Lack of genuine certification might even invalidate your product liability
    insurance, and you may suffer crippling damages in a lawsuit."

    Walter
     
  11. amp0193
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    amp0193 Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Well that was terrifying.

    I know what I'll be working on this week.
     
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  12. SanMateo
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    SanMateo Contributor

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    MJ - great post. I speacilize in commercial insurance, especially in product liability and product recall. If I could ever be of any help to you or the forum, please let me know. I'd be happy to answer any and all questions. Thanks, Matthew
     
  13. MoreVolume
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    MoreVolume Bronze Contributor Read Millionaire Fastlane Speedway Pass

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    :fistbump: With the low rates these days, no one should go without it
    I admit that I put it off for the first few months because I was waiting until I had a good amount of $. But my rates are super low. I was worrying about nothing
     

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