Getting the Proper Insurance for Your Home-Based Business – And why relying on your homeowners’ insurance is a BIG mistake!
by Veronica Stone on April 4th, 2008
Many home-based business owners are surprised to learn that their homeowners’ or renters’ policies do not cover most aspects of their home-based business. It’s important to remember that it only takes a single catastrophe or lawsuit to completely shutdown a business, leaving its owners in financial ruins. So, it’s best to be prepared for the unforeseeable with the proper business insurance coverage.
What type of insurance coverage is needed?
In order to make sure that you business is adequately covered, you’ll need to consider all aspects of it. Consider the following questions:
1. Will you be using a vehicle for any type of business purpose?
2. Will clients, vendors or delivery couriers come to your house for business purposes or to deliver business mail or packages?
3. Does the business store valuable products in a warehouse or inside the house?
4. Does the business manufacture or supply products?
5. What electronic equipment will be used for the business?
6. What other valuable equipment or tools will be used for the business?
The most common types of small business insurance
Property Insurance – Most home businesses should have property insurance. This protects against loss or damage to the property or equipment used in the business. For example, computers, fax machine, scanner, printer, copier, office furniture, etc. When securing property insurance, in most cases you will have the option of getting actual replacement cost coverage or cash value coverage. While replacement cost coverage will have higher premiums, it will better protect the business after a catastrophic loss.
Liability Insurance – This will protect a business when it is responsible for damages to a person or to a person’s property. This can be anything from a delivery person slipping on your driveway while making a delivery, to a tree on your property falling on a client’s car. Your homeowners’ policy won’t protect you from claims made by your business visitors, so instead of playing a game of chance with your financial future, it’s always best to have liability insurance for your business.
Product Liability Insurance – If your business manufacturers, supplies or designs a product or products, then most likely you will need product liability insurance. This type of insurance will protect the business if a claim is made due to damages that occurred as a result of your product.
Business Automobile Insurance – Since your personal automobile policy doesn’t cover the business use of your vehicle, you will need business auto insurance if you will be visiting clients or vendors, making deliveries, picking up packages, etc.
To ensure that you are getting the right coverage for your business, talk with an insurance agent that specializes in small business insurance. It’s possible that your homeowners’ or renters’ insurance company offers business insurance but, more often than not, you will end up using a separate insurance company for your business insurance needs. The most important thing to remember is to make sure that all parts of your business are covered; leaving something overlooked could end up being disastrous for both you and your business.
