New To The MLM World? What Type Of Insurance Do You Need?

11 June 2015
 Categories: Business, Articles

If you've recently embarked on a journey as a salesperson or consultant for a multi-level marketing (MLM) organization, you're likely excited about the personal and financial future that awaits. However, an often-overlooked aspect of this business opportunity can be the additional costs involved in thoroughly insuring your product -- and your business itself. Even if you keep spare inventory in your garage and don't undertake many business expenses, you'll want enough insurance to help you seek recourse against someone who slanders your business. You'll also want to be fully compensated in the event of theft or a natural disaster. Read on to learn more about the types of insurance you may wish to add to your home and auto policies once you begin working a MLM business.

What MLM activities will be covered by your regular homeowner's and auto insurance policies?

Before you begin storing inventory at your home, you may want to carefully look over your homeowner's insurance policy. Because in-home businesses can bring with them additional risks and expenses, many homeowner's insurance policies specifically exclude claims or losses stemming from business activities. However, depending upon the specific language of your policy and your insurance provider, you may find that your inventory or other business equipment (like computers, printers, or displays) may be covered up to a certain dollar amount.

If you're using your vehicle as well as your home to transact business, you may also want to look into the specific activities covered by your auto insurance policy. For example, if you're transporting friends to a party and are hit by an uninsured motorist, your auto insurance coverage will pay your friends' medical expenses. However, if you're transporting clients to a product party and are hit by the same uninsured motorist, you may be considered to be using your vehicle for business purposes -- and these medical expenses may be excluded from coverage. It's important to ensure that all activities you're performing in and with your vehicle are fully covered before you begin marketing your business.

What types of additional insurance may you need to add to your coverage pool?

In addition to adding specific extra homeowner's coverage for your inventory and other business expenses, as well as a commercial rider on your auto insurance policy if you'll be transporting clients, coworkers, or customers, you may want to look into umbrella insurance. This insurance helps to protect your assets once a potential claim exceeds the limits of your other insurance policies. It can also help pay your legal expenses if you're sued -- or if you need to file a defamation or copyright infringement action against someone who is harming your business.

In many cases, umbrella insurance can save you from potential bankruptcy. For example, if your homeowner's insurance coverage pays only up to $50,000 in medical expenses, and a guest at your home suffers a $100,000 dog bite wound while there to tend to business matters, you could be on the hook for this additional $50,000 yourself -- and could even find your wages garnished or bank accounts seized to assist in repaying this debt. However, umbrella insurance will often offer coverage of up to $1 million or more for such accidents, keeping you safe from all but the most extreme claims.

Because umbrella insurance kicks in only after your other policy limits have been exhausted, this insurance is generally available at a relatively low cost compared to the dollar amount of coverage offered. By purchasing this type of policy, you can go forth in an increasingly litigious business environment without worrying about potentially bankrupting legal claims that could be levied against your own company. For more information about insurance options for your business, visit