As a business owner, you know the importance of insurance. It’s one of the most important investments you’ll make, in terms of keeping your business safe. But even if you know that’s true, it’s often not clear what type of policy you need, and for how long. Should you get short-term liability insurance or long-term coverage? What’s the difference and what does it mean?
What Is Short-Term Insurance, Anyhow?
As the name implies, short-term insurance is insurance that offers you coverage for a limited amount of time. Since insurance premiums are generally paid for a year’s coverage, short-term insurance would usually be coverage for a matter of months, or even in some cases, days.
Why Get a Short-Term Policy?
There are a couple of main reasons why you may be considering short-term business insurance. Let’s say you’re a contractor. You likely need contractors insurance just to get your foot in the door and land a job. Even if your customer doesn't ask, you certainly should have coverage in place while on the job. But what if you’re working during your off season and only have an occasional gig? In that case, you may find yourself considering short-term liability insurance for contractors to keep you covered over that specific timeframe.
If you’re an event planner or a DJ, you may have a similar thought process. Say it’s January and the only booking you've scheduled is a massive show in May. If you’re on a tight budget, you may be thinking you only want coverage for the big day. But keep in mind, while you’ll definitely need coverage at the event itself, your interactions and activities during the time leading up may also require coverage.
Another example? Interestingly enough, if you’re a truck driver, you may want short-term commercial insurance. This type of insurance isn’t for your day-to-day trips, but for temporary coverage say to bring your truck home from your point of purchase, or into the shop for repairs.
There’s also short-term health insurance that many people take out. It's usually used to cover individuals who are in between policies and longer-term plans, like switching jobs, or moving from a minor status under your parents’ coverage to your own. But that’s another story.
The question is, does short-term coverage pay? That is, does it save you money in the long-run, or are you better off with a long-term general liability insurance plan?
Price and Coverage – Differences between Short-Term Insurance and Standard Policies
While short-term general liability insurance may sound appealing for all the reasons listed above, it’s not always a good idea.
For starters, you will have to remember to get new coverage for each job you book. This includes all the paperwork and logistics involved. You may also end up paying a higher rate, when you prorate it over the course of the full year. Plus, remember, certain types of work require that you prove that you have insurance, with a certificate of insurance, in order to land the job. This is certainly true for government contracts, personal trainers working in gyms, and even daycare providers. So if you don’t have a liability insurance policy in place, you could miss out.
That’s why, for most professionals, it’s likely better to get a tailored liability insurance plan. A competitively priced plan should, over the long-term, save you time and hassle. If you realize you don’t need it at a certain point, you can change it. In fact, a good provider (like Next Insurance) will allow you to cancel your insurance plan, at any time. For free! This gives you the best of both worlds. That is, you can enjoy the coverage you need, when and where you need it. Nothing more, nothing less.
The Final Verdict – Which Type of Policy Should You Choose?
When it comes to liability insurance, choosing between a short-term and long-term policy is a personal matter. Only you can determine what type of policy best fits your business needs.
If it is truly a one-time job you're doing, then a short-term liability insurance policy may be the right choice for you. If, however, you’re planning on making a living out of your line of work, then a stable insurance policy is the way to go.
Having a general liability insurance plan in place proves to employers that you’re a true professional that takes your work seriously. Plus, it saves you time, money and hassle in the long-run. In other words, while a short-term liability insurance policy can seem tempting, a long-term policy is often a better business move.