Many people assume that if they are working from home, their homeowner’s insurance covers everything. Wrong! Your homeowner’s policy is just that, a homeowner’s policy. Even if you operate a basket or craft business from your home, your homeowner’s will cover minimal if any losses to business assets. In this economy, more people are starting home businesses looking to generate additional income.
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 a 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? What would the impact be financially on you and your family?
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, 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. You need to understand the liability risk you assume in starting and operating a home office or business. Do you have employees? Some home offices and home based businesses do. Before hiring an employee, you must determine if worker’s compensation insurance is needed.
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. You’re working from home, starting a new business venture, congratulations. Let’s make sure you are covered all around.