Marcus plans to tow his trailer to weekend driveway jobs with his personal pickup. His personal auto policy hasn't changed. What should he do first?

Ask his agent in writing whether business use and towing are covered, and get an endorsement or commercial auto if they aren't.

Nothing; personal auto covers any driving.

Rely on his general liability policy for the truck.

Tell his agent at renewal, since the policy year has already started.

What does general liability insurance cover?

Injury to other people, or damage to their property, caused by your work

Your employees' injuries on the job

Ray is about to hire his first crew member. What does the SBA say about workers' compensation?

It's required for businesses with employees, and the rules vary by state.

It's optional for small businesses everywhere.

It's only needed once you have a full crew.

Your general liability policy already includes it.

A property manager asks Tomas for a certificate of insurance and to be named an additional insured. What's true?

The certificate is proof of coverage; adding the manager as additional insured takes an endorsement on his policy.

The certificate adds the manager to his policy by itself.

It means the manager's own insurance now covers Tomas's work.

He should send a copy of his whole policy instead.

A snow contract says Dee's company will hold the property owner harmless for slip-and-fall claims. What should she do before signing?

Have her agent or an attorney read the clause and confirm in writing that her policy covers snow and ice work

Sign it; every snow contract says that

Sign it now and add snow work to her policy after the first storm

Skip insurance for snow work, since it's only a few months

Two general liability quotes come back. The cheaper one has lower limits and more exclusions. What's the right comparison?

Ask for the same limits on both, then compare deductibles and exclusions line by line.

Take the cheaper one; coverage is all the same.

Compare only the yearly premiums, since the limits are close enough.

Pick the one with the lower deductible, since that's what you'd pay on a claim.

Tomas's crack melter is stolen off his trailer overnight. Which coverage would handle that, if he bought it?

Equipment coverage, often called inland marine

Marcus added snow and ice work in November. What should he tell his insurance agent?

Every service he does or plans to do, including the new snow work

Nothing until renewal, since snow work runs only a few months

Only the services he listed when he first bought the policy

Lesson B100.7 · Business 100: Start Right

Insurance before the first job

5-minute read · No dated figures

An older person's hands sign a document with a ballpoint pen — Photo: Matthias Zomer / Pexels, Pexels License

The short answer

Before your first paid job, carry what the law and your contracts require, plus coverage for any loss you couldn't pay for yourself. For most new pavement businesses that starts with general liability and commercial auto, then workers' comp once you hire. Your personal auto policy may not cover business use or towing a trailer, so ask your agent in writing. Shop with an independent agent and compare limits and exclusions as closely as price.

What each coverage is for

Coverage	What it's for	Ask the agent
General liability	Injury to other people, or damage to their property, caused by your work	Does it cover every service I do? Work I've finished? Overspray and runoff?
Commercial auto	Your truck and trailer while you're working	Is towing covered? Who's allowed to drive?
Workers' comp	Employees hurt on the job	When does my state require it? Am I covered as the owner?
Equipment coverage (often called inland marine)	Theft of or damage to your rigs, melters and stripers	Is equipment covered on the trailer, in storage and at job sites?
Umbrella	Extra liability on top of your other policies	Which policies does it sit on top of?

General liability is for claims from other people. It doesn't pay to replace your own melter when it's stolen off the trailer. That's what equipment coverage is for.

Your own health and disability coverage is personal insurance. Personal Finance 102 covers it.

Your truck is the gap new owners often miss

One state insurance department puts it plainly: driving for business beyond commuting can call for an endorsement or a commercial auto policy, and its examples include landscaping and snowplowing. Tell your agent every way you use the truck, including the trailer and what's in the tank.

Example. Marcus tows his trailer to a Saturday driveway job and rear-ends a car at a light. If his personal policy excludes business use, the claim can be denied and the bill becomes his. A phone call to his agent before the first job would have told him.

Rules, contracts and snow

Workers' comp. The SBA lists workers' compensation, unemployment insurance and disability insurance as required for businesses with employees, and says the rules vary by state. For private employers, workers' comp is a state program. Check yours before your first hire.
Certificates of insurance. Property managers and other commercial customers will ask for a certificate before you start. Many also ask to be named as an additional insured, which takes an endorsement on your policy. A certificate is proof of coverage. It doesn't add coverage by itself.
Snow and ice. Slip-and-fall claims are the big risk, and snow contracts often include an indemnity or hold-harmless clause that shifts the property owner's risk onto you. Before you sign, have your agent or an attorney read the clause and confirm in writing that your policy covers snow and ice work.
Tell the agent everything. List every service you do or plan to do: sealcoating, crack repair, striping, snow and ice, pressure washing. If a service is left off, ask the agent in writing how a claim from that work would be handled.

How to shop

Use an independent agent who can quote more than one insurance company. The SBA's advice is to talk with licensed agents and compare terms and prices, because both can vary a lot. Give every agent the same description of your work and ask for the same limits, so the quotes line up. Then compare limits, deductibles and exclusions, line by line.

Your Move

Do this week

Write a one-page description of your business: services, trucks and trailers, equipment, where you work, and if you'll hire this year.
Call your personal auto agent and ask, in writing, whether business use and towing are covered.
Get two quotes with the same limits for general liability and commercial auto.
Compare them on limits, deductibles and exclusions before you look at price.

Log it: I got two insurance quotes.

Common questions

What insurance do I need to start a sealcoating business?

Start with what the law and your contracts require: general liability, commercial auto for your truck and trailer, and workers' comp once you hire. Add coverage for any loss you couldn't pay for yourself, like equipment theft.

Does my personal auto insurance cover my work truck?

It may not. Personal policies can exclude business use or towing. Ask your agent and get the answer in writing.

Do I need workers' comp if it's just me?

Rules for owners vary by state. Ask your agent and your state's workers' compensation agency.

Watch out for

Buying the cheapest quote without reading the exclusions.
Leaving a service off the application, like snow work you added in November.
Signing a hold-harmless clause your policy doesn't back up.
Treating an LLC as a replacement for insurance.

Free help

SBA: Get business insurance
U.S. Labor Department: Workers' compensation, which points you to your state's program

Members: tools for this Move (after sign-in)

PavingSavings Insurance Review: an inventory of the insurance pages you already have and a packet for a licensed broker. The National Pavement Maintenance Contractors Association (NPMCA) does not sell, quote, or advise on insurance.

NPMCA may be paid by partners listed here. The lesson above is the same either way.

Free practice

Lesson check

5 questions on this lesson, one at a time, with the answer and the reason after each. Pass with 4 right, including every must-know question.

This is general education, not tax, legal, investment or insurance advice. Rules change and every situation is different. Check the sources below, and talk to a qualified professional before you act on it.

Sources

SBA: Get business insurance
Utah Insurance Department: Business use of your auto
U.S. Labor Department: Workers' compensation
SBA: Pay taxes

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