If you are an entrepreneur running a profitable home-based business, it is time to think about getting your company insured. Unfortunately, home-based business insurance is often neglected with an assumption of homeowners’ insurance covering the home-based commercial activities.
However, this is not the case, and home-based business can even void your home insurance. That’s because home insurance covers only risks associated with your home. Using the house for running activities unknown to your insurer may invalidate your policy. So, take a look at getting the right home business insurance policy:
What is Home Business Insurance?
In some ways, a home office or home business insurance covers your home like any standard home insurance policy. However, the difference lies in providing added protection against the risks your home may face due to business. If you are running a business from home and have no other commercial premises, you may need to update your standard insurance to a home business insurance.
Even if your business poses little or no risk, you must inform the insurer about it. You are guaranteed coverage against business risks that affect your home for a little rise in the premium.
Since insurance companies are the ones protecting your home, it is only fair that they know what elements they are protecting your house from. Should you not disclose this usage, a future claim, even if non-business related, can be declined by the insurer.
What Risks Your Business May Pose?
Your insurer will be concerned with additional risks like:
- Members of the public visiting your place
- Keeping an inventory of supplies at home
- Having employees working inside of your home
- Maintaining client and employee records on your computer
- Fire/theft of equipment or stock
Homeowners insurance may not adequately cover all these risks associated with a home business. Without the right coverage, you will be responsible for compensating in cases of lawsuits
- Property damage
- Data loss issues
- Employee injuries
What Kind of Insurance do You Need?
Before answering this question, take a look at the kind of home business you are operating. Based on the business activities, you may need additional coverage types for your home.
Business Property:
Business owners must have business content insurance apart from regular property insurance. Take a quick look around and evaluate the cost you would incur for replacing your office equipment. Most homeowners’ policies limit content coverage and do not include business equipment like laptops, cell phones, printers, etc. Also, check if all the equipment stays inside your home at all times. Business equipment is covered while they are inside of your premises.
Business Vehicle:
If you are using a vehicle for business purposes, ensure that it is adequately covered. The insurance must cover vehicle damages and your liability to others during an accident.
General Liability:
General liability insurance is another insurance type to consider for home business owners. This insurance covers injuries to employees and clients while they are on your premises and elsewhere.
Professional Liability:
If your home-based business offers services, you may want to consider liability insurance as it is beneficial for both your business and clients. It protects your assets and pays for your defense when a client claims to have suffered damages from your professional actions.
Errors and Omissions:
This insurance is for those who are paid to give out professional advice. It covers your defense when a client blames your advice for being incomplete, incompetent, and causing the client to incur damages. If your home business involves delivering services at a client location, consider choosing completed operations coverage that covers your liability after leaving the client’s premises.
As a self-employed professional, running a home-based business, homeowners’ insurance may not be adequate to cover the risks arising from business operations. Specialized home business insurance can help protect your property and profession from the uncertainties of business functions. It is your best bet for lowering the risk and securing your home business.
