Once you have a small business in operation, even before making your first sale, you have greatly increased your risk. Suppose you are starting a home based business and have inventory stored in basement, garage, or additional room in your home.
Most homeowner’s policies have limited if any coverage to protect those business assets. What would happen to your start up business if you had to replace the entire inventory a second time before generating a penny in revenue? Your homeowner’s policy is just that, a homeowner’s policy.
Even if you operate a basket or craft business from you home, your homeowner’s will cover minimal if any losses to business assets. What if your basement floods or your garage leaks and you lose inventory or equipment? Orders ready to be delivered are destroyed? There is a good chance that ‘business equipment or business inventory’ won’t be covered.
The same goes for your vehicles if using them for your new business. What could happen if you were to injure a third party and their vehicle or other property? Again, your personal coverage may offer limited or worse yet, no coverage. Then, the injured party may go after your assets such as your home, which you claim is the office or address of your business and therefore, even though your homeowners doesn’t recognize liability, a judge in fact just might.
It is far simpler to contact a licensed insurance professional, and make business insurance a part of your initial start up cost. Discuss with your insurance professional all aspects of your business model and follow the recommendations to protect not only your business assets, but your personal assets too. Just because your business is home based doesn’t mean it’s covered by your home owners insurance.