These days many successful entrepreneurs and small business owners are operating their business from the comfort of their homes. But even though you can run your home-based business in your fuzzy slippers, it doesn’t mean that it isn’t a real business. It needs to be insured just like any other brick and mortar business.
It’s important for a small business owner to note that neither homeowners’ nor renters’ insurance policies cover home-based businesses. Therefore, if you run a business out of your home, it’s wise to work with an insurance professional who can provide you with more details on home based business insurance for your business. Until then, let’s take a look at the basics of home based business insurance.
For instance, if a robber steals your cash or an employee steals your inventory, you’re covered if you have commercial crime insurance. Further, working through crime losses, not only takes money, but also your time — both are resources that would be more suitably spent on growing the business.
The type of coverage you need for your home based business will depend on your business or industry. Some types of home based business insurance include:
Home Based Business Property Insurance – To be insured against loss or damage to property used in your business, a small business owner should have business property insurance. For instance, if your home office, including all its contents such as computer, fax machine, furniture, printer, is destroyed in a fire, your homeowners’ policy doesn’t typically provide coverage for this incident. Instead, you’d need business property insurance.
Home Based Business Liability Insurance – If people come to your house for a business purpose, then liability insurance is necessary. Liability insurance protects you and your business for damages caused to another person or property. Again, your homeowners’ policy won’t protect you from claims made from business visitors who may have been injured at your home-based business. For example, if a delivery agent who is making a business delivery to your home slips and falls, you’ll need liability insurance not homeowners insurance in order to be covered.
Home Based Business Professional Liability (Acts Coverage) – Similar to professionals working out of their home, professional working inside their home need professional liability insurance. Professional liability insurance protects professionals against potential negligence or failure to deliver claims made by their clients (or patients).
Home Based Business Product Liability Coverage – If you’re a business who makes or supplies a product, speak with your insurance professional about product liability coverage, which protects your business for damages to property or a person caused by a product you designed, manufactured or supplied.
Home Based Business Automobile Coverage – If you need to make (or pick up) deliveries, visit clients, or otherwise use a vehicle for business purposes, your personal auto policy won’t cover the business use of the vehicle. Instead, you’ll need business automobile coverage, which will provide coverage if you are in an accident.
Other Coverages
There are other home based business insurance coverages that may be important depending on your business. For example, if your business has employees, you’ll need workers compensation insurance. Endorsements and riders on homeowners’ policies in addition to specialty home and office policies are important coverages that every small business owner should consider.
