Do you ever give any thought to the potential risks that your WordPress business might be facing?
If you’re like most small business owners, you probably don’t. Sure, every now and then a “what if?” thought pops into your head. But dealing with client inquiries, lead generation and a mountain of other issues often means that priorities are dictated by the degree of urgency.
And that’s the funny thing about business insurance – it’s rarely an urgent matter. Until, of course, it’s too late. Insurance is not an exciting topic. But unfortunately, it’s a topic that needs to be addressed because the future of your business and financial well-being might depend on it.
In this post, we’re going to outline the core issues that you should be considering when it comes to insurance for your WordPress business. We’ll also cover some of the different types of insurance you might want to think about obtaining.
To Insure or Not to Insure
One of the biggest challenges when it comes to running any small business is the sheer magnitude of issues you have to deal with. Between lead generation, onboarding new clients, technical problems and maybe even employees, something has to be put on the back-burner. Insurance is often one of those things.
The need for insurance is a catch 22. There are times when it makes absolute sense. But there are also times where it pays to think carefully before making a decision about whether or not it’s required.
The insurance industry will have you believing that you should insure for every eventuality. Just keep in mind that insurance companies are in the business of managing their risk as well as yours. They employ actuaries, who use complex mathematical formulas and statistics to predict the probability of a future event occurring.
If an insurance company pays out more than they bring in from premiums and investment returns, they are in a position of losing money. Any time you purchase insurance, you can be sure that the odds are slanted in the favour of the insurance company.
On the other hand, if you pay those premiums and end up needing the insurance, you’ll be grateful you have it. The secret here is giving some serious thought to how you, as a business owner want to manage your risk.
Luckily, there are many different types of insurance available. This means you’ll be able to look at your WordPress business and determine which areas you feel present an acceptable risk, and which areas require coverage.
The vastness of the WordPress ecosystem means that there is also a wide variety of business types. We have developers, designers, hybrids, WordPress maintenance providers, content creators and conversion optimization specialists to name just a few.
The insurance needs of each one of these WordPress businesses is going to vary, which is why you need to use your judgement when making a decision. It’s also a good idea to get advice from an insurance broker and a lawyer as well.
If you’re working as a sole proprietor, you and your business are considered to be a single entity. That means that you personally are responsible. If a client feels that you’ve done something wrong and they pursue legal action, they can come after you and your personal assets.
As we jump in to take a closer look at the different types of business insurance, remember that each decision you make should come with a cost-benefit analysis. Very few people, especially small business owners, can afford to insure themselves against every possible scenario.
Health & Disability Insurance
When you insure your car, you’re often given the option of replacement insurance. If for some reason your car is destroyed, the insurance company will replace it. That’s important right? Nobody wants to lose their ability to get around town – it’s inconvenient.
But what if something took away your ability to earn an income. Wouldn’t you find that to be inconvenient as well? You bet you would! Consider for a second, your earnings potential over the next five, 10 or 25 years. If you lost that potential, what would your liability look like and how might your life change? Would it affect your ability to provide for your family?
Most of us who are able-bodied and working with WordPress, rely on our fingers to type and or eyes to see the screen. What if you lost that ability? How long would it take to learn the skill again with your disability? I don’t point out these scenarios to scare you. I point them out because most business owners don’t think about them until it’s too late.
Health is always a concern. When you’re young and carefree, these things rarely cross your mind. But as you get older, the chances of health problems increase. At some point in time, it might be a good idea to insure your most important asset – yourself.
Typically, health insurance can be broken into a few different categories so you can pick and choose what you feel is most appropriate. These include:
- Critical Illness.
- Long-term care.
- Health and Dental.
While not all of these insurance types are critical to your business, they can be critical to your ability to earn an income from your business. And that is what it’s all about in the end – your continued ability to provide for yourself and your family.
Liability is always a concern for small business. As a WordPress professional working from your home or office, you need to be concerned about what clients or other people may feel you are liable for. Sometimes, unbeknownst to you, a client might have a reputation for being quick to head off to court.
For example, if you work from home and have a dog, what happens if a client comes to see you and is injured by your dog? It seems absurd, but these are the kinds of things that happen. Or what happens if a client trips down your stairs and says it was your fault?
Maybe those scenarios sound a little too far-fetched for your business? General liability insurance can cover the loss of data as well. If you’re building out a client’s website and you lose 2,500 lines of code the day before launch, what will that delay cost your client in lost revenue? Is it possible that you could be on the hook for damages?
Unfortunately, we live in a litigious society. General liability insurance can help to manage those risks caused by personal injury, property damage or bodily injury.
Errors and Omissions Insurance
Sometimes Errors and Omissions insurance (E&O) is also referred to as professional liability insurance. This type of insurance is designed to cover you in the event that you make a mistake – even if it’s caused by negligence or lack of judgement. Anytime you are providing professional service or advice, E&O insurance is a good idea.
We all know the importance of backing up a website before making any changes to a database, right? What if you were tasked with updating a client’s WordPress website to the latest version, or even cleaning up the overhead in their database, and you forgot to backup. What if their entire database was lost as a result of your mistake and their business went offline? What would your potential liability be in this situation?
Error and Omissions insurance is as much about protecting you as it is about protecting your client. If both parties are involved in signing a contract, it’s not uncommon for there to be an insurance requirement contained within it. E&O coverage can keep both parties at ease.
Any time you bring a partner into your business, it’s a good idea to consider partnership insurance. If you’re running a small WordPress development agency and there are two or three partners involved, it’s important that no single partner is faced with the liabilities of the others.
This is one area where getting legal council is an especially good idea. There are various opinions as to the best way to structure insurance products between partners. Corporate insurance owned by the partnership must be weighed against a personal policy and, depending upon your jurisdiction, there can be tax, creditor and family legislation issues that need to be considered.
Another angle to be considered is what happens to your partner’s share of the business in the event of death? Would their spouse be your new partner? Or, would you have a buy/sell agreement in place with an appropriate insurance policy that gives you the ability to buy out their half of the company?
Workers Compensation Insurance
There are times when the government steps in and mandates the use of insurance. If you’ve managed to build yourself a small WordPress agency and are finally at the stage of bringing on a few employees, Workers Compensation Insurance is almost always a requirement.
Depending upon your location, you may be required to purchase a Workers Compensation policy from an insurance company or in some cases, there will be a government body that is responsible for administering the coverage.
In most situations, if you don’t have employees you are not required to maintain workers compensation insurance. But just because it’s optional doesn’t mean it’s not worth looking into.
You should also pay close attention to the laws in your specific area regarding contractors. You might find that you are responsible for that casual SEO contractor because she’s uninsured and performing work for your company.
The primary purpose of this article was to get you thinking about where your potential liabilities might exist and what types of insurance you might give some consideration to.
While it’s possible to insure against most risks and liabilities, it’s not always affordable. Depending upon what type of work you’re doing with WordPress and in what capacity, you’ll find that your insurance needs will change.
Before making any decisions regarding insurance, it’s a good idea to get opinions from more than one source. Insurance can get expensive rather quickly so it’s often a case of finding an appropriate balance. Just remember that the day you really need it, the cost will seem relatively inexpensive.
If you currently maintain any form of insurance, how did you decide what was most important for your WordPress business?