Direct-Selling Establishment Insurance

Whether you call yourself an independent consultant, a distributor or a product representative, if you have a direct selling business, you face some risks that can threaten the livelihood of your entrepreneurial business venture. 

Many direct sellers sink a lot of capital into starting their businesses, and if you are among them, it's particularly important that you protect your investment with a sound direct selling establishment insurance portfolio.

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Direct Selling Industry Facts from IBISWorld

What Types of Businesses Fall under the Direct Selling Company Umbrella?

Direct selling businesses sell products or services without the use of a fixed retail establishment. Those who work in this industry generally work out of their homes, door-to-door, or from a truck or wagon. 

The range of businesses that fall under the direct seller umbrella is vast. Some examples of jobs that fall under this category include:

Regardless of what you're selling, if your inventory holds significant value, it may be worth your while to invest in a commercial insurance policy.

Get the Right Property Coverage for Your Direct Sales Business

Many direct sellers keep their product inventories in their homes. Others may rent storage space or, in some rare instances, even invest in warehouse space. 

Regardless of where you keep your inventory, if you have invested a lot of money into building it up, it's crucial that you purchase coverage in the event that it is lost, stolen or damaged.

• Contents insurance: If you're keeping your inventory in your home, you may think that your homeowners insurance is sufficient to cover your business property. However, this coverage may be very limited. If your inventory is of significant value, you may need to purchase either an endorsement through your home insurance or contents coverage through a commercial insurance plan. An independent agent can help you determine your best option.
• Spoilage insurance: Some products, such as frozen foods and even some cosmetics like lipstick, can go bad when exposed to extreme temperatures. If a power outage caused your supply of frozen foods to thaw or if a failure of your air conditioning system caused your cosmetics to become ruined, spoilage insurance would provide compensation for your losses.
• Inland marine insurance: This can cover your property when it is in transit or off-premises, such as while you are taking it to someone’s home for a home party demonstration. This coverage may be beneficial if your products hold significant value.

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Protect Your Direct Selling Establishment from Liability Lawsuits

It is a good idea to set your direct selling establishment up as a limited liability corporation to protect your personal finances from the risk of a liability lawsuit. It is equally important that you protect your business through commercial liability insurance. 

Most direct sellers face little risk of a lawsuit, and this would be reflected in lower rates for this insurance. Some coverage types that may be beneficial include:

• Off-premises liability insurance:  This provides coverage if you cause bodily injury or property damage to another while doing your job. For example, while doing a product demonstration in someone’s home, you could accidentally break an expensive vase or start an uncontrolled fire.
• Product liability insurance: If the products that you are selling cause your customers bodily injury or illness or damage another’s property, your business can be sued. Product liability covers court costs, legal fees and financial damages in such a case.
• Auto liability insurance: If you or someone who is working for you uses your personally owned vehicle for work-related jobs, such as to drive products to a demonstration area, your car insurance company may not cover your liability charges if you cause an accident while on a work-related job. Adding hired or non-owned vehicle liability coverage protects your business from financial losses in this instance.

What Other Insurance Can Benefit Your Direct Selling Establishment?

In addition to property and liability coverage, there are other insurance coverage types that may be worth considering. These include:

• Business income insurance: If your direct sales business enjoys a regular and steady income but a covered disaster forces you to halt operations while repairs are made, this coverage provides you with a continuation of income until you are back on your feet.
• Workers' compensation insurance: Most direct sellers don't employees, but the range of businesses in this category is vast. So it's possible that your business does, in fact, employ others. In this case, your state may require you to carry workers' compensation insurance, which covers the cost of treatment for injuries sustained on the job.
• Health insurance: Most people in the direct selling environment aren't covered by employer-subsidized health insurance. Unless you have coverage under a parent or a spouse, you'll need to purchase this insurance on your own. An independent insurance agent can help you navigate your state’s health insurance exchange to find suitable coverage at a reasonable rate.
• Flood insurance: Home and business insurance has exclusions for damage caused by floods. If your inventory is at risk of damage by floodwaters and it holds a significant value, you may want to consider purchasing flood insurance through the National Flood Insurance Program (NFIP).

Because there are so many different types of direct sales businesses, there's no single policy portfolio that's right for all of them. When you discuss your business operations with an independent insurance agent, your agent can help you understand the various exposures your particular business faces and can recommend coverage designed to mitigate your risks.

Get Help Building a Strong Direct Selling Establishment Insurance Portfolio

Purchasing business insurance for your direct selling business can be a complex process, especially if you're buying commercial insurance for the first time. 

This is why it's to your advantage to work with an independent insurance agent. Not only can the agent help you determine your potential risks, but they can also find you competitively priced coverage that provides the protection you need. 

Find an agent near you to learn more about direct selling establishment insurance designed specifically for your business.