Home-Based Businesses and Insurance

We’ve heard it before: “It’s just a home based business, why should I spend money on business insurance?”

A recent survey showed that up to one in ten households operate some type of home based business from their home.  Many of these same small, part time business owners have not put some sort of business insurance in place.

In fact, many of these part time business owners mistakenly think their personal insurance will protect them.  That type of thinking could put their home and assets at incredible risk. Home based business owners are at risk for serious financial losses in the event of theft, accident, damage or perceived damage to a client, natural disaster, vehicle accident or other types of loss or damage.  Most homeowner’s policies won’t cover business related losses.

If you’re operating from home, not only can you be risking business property, but personal property which won’t be covered with a business incident.

There are steps a home based business owner can take to reduce their risk exposure. One possibility is a business rider added to your homeowner’s policy.  If you’re writing or just using a phone and computer for your part time business a rider may be all that’s needed.

However, if you’re manufacturing or perhaps doing some type of repair work in your basement, garage or even den, there is a good chance you need more insurance coverage.  Talk to a business broker and check with your state department of insurance. If you hire an employee, you may have to purchase worker’s compensation insurance.

The risk of not having appropriate coverage is formidable.  If you have started a small, part time business, contact a licensed commercial insurance broker.  Work with them to determine what insurance is needed.

Typically, you need some type of general liability coverage, business property insurance, and if you have employees, worker’s compensation.  Ask about a Business Owner’s Policy, or BOP as a possible solution.  A BOP will offer both liability and property coverage and possibly some other coverage all in one simple policy.

Don’t risk all you have worked for up until now by avoiding or neglecting this important component of being a business owner.  Your agent or broker will guide you to what coverage is needed today, and more important, how to protect the future as you grow your business.

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