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July - August 2018
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Disponible en línea en español.
Your Insurance
with
Cathy Karas
Cathy J. Karas, Certified Insurance Counselor, President, Karas
Insurance Agencies Inc, 321 So. Riverside Ave.,
Croton-on-Hudson, NY 10520
INSURING YOUR
FULL TIME OR
“ON THE SIDE”
COMMERCIAL
BUSINESS,
MARINE OR
OTHERWISE
I
t is common that some people decide to either make some extra money
on the side, while still employed to supplement their income, or take up some
part time work while retired. What is your exposure to a possible law suit by
doing this and assuming this risk of something going wrong in the process with
the work you are performing? What could possibly happen, you might think,
for this minimal exposure since either you are performing your “work” only a
few times a week and maybe for friends, family or referrals? First let’s see
if what you are doing is considered a “commercial” exposure. Anytime there
is an exchange of money or services! So the fact you accept cash only and
there is no “paper trail” with a check or credit card receipt does not let you off
the hook. Neither does an exchange of services, like bartering, as this can
also be considered a form of payment. First, a description of what a “full-time”
commercial marine type business might need as an example. Then some
scenarios of some home based, part time businesses that may operate out
of a home.
Some examples of types of businesses that require specialty marine
insurance include boat dealers, marinas, boat clubs, cruise or in water
transportation of any type, fishing charters , boat rentals, and marine repairers
and surveyors. Examples of policies they may need can include:
General liability insurance - bodily injury and/or property damage they may
cause through their “negligence”. Marina operator’s legal liability is another
coverage which includes coverage for the boats themselves while being
worked on or in their care, custody or control. All of the above businesses
need this type of insurance. If alcohol is served, liquor liability insurance as
a separate policy can be included if not an automatic coverage in the general
liability form or an endorsement that could be purchased as an add on to an
existing policy.
Boat insurance- if this is a cruise, water taxi, fishing charter, etc.. they also
may need a separate general liability insurance policy for the dockage hazard
of injury to passengers boarding or deboarding on land. Like your personal
boat policy, a commercial boat policy can provide insurance for hull, machinery
and equipment and bodily injury/property damage caused to others, as well as
injuries to passengers. If the boat is not relatively new, a survey will probably
required and all operators may need a full captain’s license.
Workers compensation - anyone paid to perform services under someone’s
business needs to be covered by a policy. Payment to the employee in cash
does not mean you don’t need this. This coverage pays the medical cost for the
injury plus a portion of the salary the injured employee is unable to collect due
to his inability to work. New York State also requires disability insurance for an
employee, which pays also pays a portion of salary for lost time from work due
to a nonwork related injury.
Vehicles and equipment - cars, trucks, trailers, cranes, barges, etc. all need
liability insurance even if not for road use, and can usually be insured for theft
and/or other physical damage.
So these are some of the types of policies a commercial business might have
to fully insure themselves, as a corporation, LLC or an individual. But what
about your own “on the side” business. Maybe you do shrink wrapping, boat
cleaning, transport services or take people out fishing. You may think that
because this is a small business on the side you can operate without insurance.
This is a dangerous situation as all of your personal assets are at risk in the
event of a loss resulting in a law suit. Particularly if you have not formed a
corporation or LLC for this entity, a judgment against you can mean future
earnings are garnished and/or liens against your home and any other assets
if you do not have insurance. For these marine exposures, yes you can buy
policies to cover your smaller exposure, with a lower cost than a full-time
commercial operation. Rates are often dependent on the gross annual sales
or payroll, so your cost for insurance would certainly be less than for a larger
business with employees.
For some other non-marine types of home based businesses, insurance
can be inexpensive, but this depends on what type of “business” you have.
One company we use for this type of exposure is RLI, who has a special in
home business policy. Some of the classes they can write are crafts, home
sewn items, perfumes, baking or food related items you prepare in your home,
knife sharpening, and offices. You may sell these items out of your home or
at flea or farmer’s markets and street fairs. The policy can include product
liability, and bodily injury/property damage insurance at the actual location of
the “event” you may be setting up a table to sell at. Often the venue you are
selling at requires insurance, and these in home business policies can satisfy
that requirement. If you are watching children at your home, even if for a friend
and there is any exchange of money or services, this is considered a “business”