Starting a Small Business Assessment

1. Kim runs a design business from home with $6,000 of equipment. What does a standard homeowners policy typically provide for business property at home?
- A) Full coverage for all of it
- B) Only limited coverage, often around $2,500
- C) Coverage only if she has employees
- D) Coverage only for equipment bought this year
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: Homeowners policies typically give only limited business property coverage, often around $2,500 at home, and commonly exclude business liability. A business policy or endorsement fills the gap.
Review: Does Homeowners Insurance Cover Your Home-Based Business?
1. A client trips over a cable in a home office and is hurt. Why might the homeowners policy not pay the claim?
- A) Homeowners policies commonly exclude business-related liability
- B) Visitors aren't covered by any policy
- C) The deductible is too high
- D) It only covers falls outdoors
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: Standard homeowners policies commonly exclude liability arising from a business. A business liability policy is designed for it.
Review: Does Homeowners Insurance Cover Your Home-Based Business?
2. A client says a consultant's advice caused them a $40,000 loss. Which coverage is designed for that kind of claim?
- A) General liability
- B) Commercial property
- C) Professional liability
- D) Workers' compensation
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: Professional liability is for claims that your advice or services caused a financial loss. General liability is for bodily injury, property damage and advertising injury.
Review: General Liability vs Professional Liability: Which One Covers Which Claim?
2. A customer slips on a wet floor in a shop and is injured. Which coverage generally responds?
- A) Professional liability
- B) Business interruption
- C) Cyber liability
- D) General liability
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: Bodily injury to a customer on your premises is a general liability claim. Professional liability covers financial loss caused by your services.
Review: General Liability vs Professional Liability: Which One Covers Which Claim?
3. A river flood fills a shop with water. What does the Texas Department of Insurance say about most commercial property policies?
- A) They cover flood in full
- B) They exclude flood damage
- C) They cover flood only for inventory
- D) They cover flood after a 30-day wait
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: Most commercial property policies exclude flood. A separate flood policy, such as an NFIP commercial policy, covers the building and contents up to $500,000 each.
Review: Does Business Insurance Cover Flooding?
3. Under an NFIP commercial flood policy, what is the most that each of building and contents coverage pays?
- A) $100,000
- B) $250,000
- C) $500,000
- D) There's no limit
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: FEMA says commercial building and contents coverages each go up to $500,000. Lost business income isn't covered by an NFIP policy.
Review: Does Business Insurance Cover Flooding?
4. A contractor with no workers' comp brings a helper who is hurt on your job. How may most states treat the helper for workers' comp purposes?
- A) As your employee
- B) As a customer
- C) As self-employed, with no claim against you
- D) As covered by your auto policy
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: Triple-I says most states treat an uninsured contractor, subcontractor or their employees as your employee for workers' comp, so you may be liable. Ask contractors for proof of insurance first.
Review: Does Your Business Insurance Cover Independent Contractors?
4. What's the main step that helps avoid paying for an uninsured contractor's injured worker?
- A) Paying the contractor in cash
- B) Getting proof of the contractor's workers' comp before work starts
- C) Agreeing on the job verbally
- D) Raising your deductible
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: Written proof of the contractor's workers' comp and liability coverage, with dates covering the job, generally keeps an injury claim with the contractor's insurer.
Review: Does Your Business Insurance Cover Independent Contractors?
5. An employee crashes their own car while running a work errand and injures another driver. Which business coverage is designed for the business's share of that liability?
- A) General liability
- B) Business personal property
- C) Equipment breakdown coverage
- D) Hired and non-owned auto coverage
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: The employee's own auto policy usually pays first. Hired and non-owned auto coverage is designed for the business's liability above it. General liability typically excludes auto accidents.
Review: Employees Driving Their Own Cars for Work: Who's Liable?
5. After an employee's at-fault crash on a work errand, which policy usually pays first?
- A) The business's workers' comp policy
- B) The employee's personal auto policy
- C) The business owners policy
- D) The other driver's collision coverage
Practice: you’ve seen the answer to both versions of this question, so it won’t change your Insurance IQ.
Explanation: The employee's personal auto policy generally responds first. The business can also be liable, which is what hired and non-owned auto coverage is for.
Review: Employees Driving Their Own Cars for Work: Who's Liable?

Educational only: this assessment measures what the journey teaches. It says nothing about whether your own insurance is adequate, and it isn’t a professional evaluation of your policy.

Starting a Small Business: Final Assessment

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