Protecting your VA business that you’ve worked so hard to build is essential for being and staying successful in this fast paced world. Having business insurance in place is one way to guard against any unexpected errors or disasters.
Two types of business insurance that I think are most important in defending your VA business are General Liability, also known as a Business Office Policy (BOP), and Errors and Omissions (E&O) Professional insurance. Although purchasing business insurance is a personal choice, I believe that having it reflects to prospective clients your level of professionalism and legitimacy in business, and should be considered as essential as continuing your education or updating hardware and software.
General Liability Policy
BOP, or General Liability insurance, covers personal property, like your computer, desk, and any equipment that helps you function in your virtual profession. Should your computer die due to a loss, i.e., virus, fire, etc., General Liability insurance will cover for the recovery of all data that is lost, or will cover the cost of purchasing a new computer if your old system is not fixable. BOP also covers any loss of income that is incurred from having your computer die, until your business is fully operational again. And should a house fire occur, everything is protected through a General Liability policy up to your selected limits.
General Liability also protects you should a client come to your house to pick up a project and happens to fall down and breaks her arm, and BOP even covers mishaps on your client’s computer should you be working on-site and accidentally ruin her computer with a spill, or some other unfortunate catastrophe.
Errors and Omissions Policy
Errors and Omissions Professional insurance covers negligent acts where a client has suffered a loss because of an error you made; like failure to prevent other parties from gaining unauthorized access to your computer, or publications of materials, or a publication that violates a right to privacy.
An E&O policy gives you the means to hire an attorney to defend you if a claim is ever brought against your business. Even if the law suit is fraudulent and you’re innocent but there is a judgment against you, E&O insurance fully covers your business in this situation.
Application Process – What to Expect
To receive the most beneficial rate and coverage, be sure to use the same agent when applying for BOP and E&O insurance. Submitting an application for BOP is an easy process and most times can just be a short telephone interview with the agent, having coverage in place nearly before you hang up the phone!
However, the application process for E&O coverage is somewhat lengthy. The recommended amount of coverage depends on the services you provide, and how high risk the underwriters view your services: whether web design; web hosting; event planning; hardware design; or accounting, etc. In addition to filling out an application, you must submit marketing materials, resume or work history, a most recent financial statement, copies of standard contract(s) used with clients, and any other forms or materials which provide the underwriter with information about the services you perform. Fortunately, if your business is established, all these pieces should already be in place and ready for submission. And if you’re an emerging VA, being able to acquire business insurance to establish yourself as a professional will be a good incentive for developing these pieces!
General Costs – Approximate, of Course!
Costs for coverage will vary depending on how high risk the types of services are that you provide to clients, but for Professional/E&O insurance with coverage of 1 million, premiums can range from $40 to $70/month, depending on the deductible chosen and the services you provide. But if you want to reduce your monthly premium yet still have protection, the cost could be as little as $27 per month for $250,000 coverage.
For a General Liability policy of 1 million, the premium is approximately $20-$25 per month. I chose coverage of 1 million for each General Liability and E&O, and my monthly premium is under $70/month total. Not bad for knowing your business is completely protected! Your agent will be able to recommend the amount and type of coverage that is best for your VA business.
Disability & Life Insurance
For overall coverage, you might also consider disability and life insurance. A disability plan helps replace a percentage of your income in the event of a total or partial disability. This is very important protection because your family may very well depend on your income and may be devastated financially if you were to become disabled and unable to work. I would also recommend the need for Life insurance to pay off any debts or other financial obligations in the unexpected event of your death. Depending on the type of policy you purchase, there are some that also have a built-in savings account that can be used in the future as a living benefit.
Contacting an Agent – Yours or Mine
Absolutely, work with an agent who specializes in business and commercial insurance! Don’t just contact your neighborhood agent who provides auto and homeowner’s policies; be sure to work with an agent whose focus and experience is business and commercial insurance. And when interviewing agents, stay away from using the terminology “virtual,” because most agents don’t understand it yet. Instead, say that you operate a home-based business.
For further information, feel free to contact my
