Nowadays, many successful small business owners and entrepreneurs run their businesses from their homes. However, just because you can operate your business at the comfort of your home doesn’t mean it is not an actual business. This simply means that it needs to be insured just like any other conventional business.
It’s important to note that neither renters or homeowner’s insurance covers home-based businesses. As such, if you run your company from your home, it’s essential to work with an insurance agent who can offer more details regarding the types of home-based business coverage available for your particular business.
Before we get into the reasons why you need commercial insurance for your home-based business, it is only fair to define what the policy entails. Home based business coverage protects you from property damage, claims arising from third parties and more. It’s important to keep in mind that home business insurance isn’t a type of insurance, but a collection of insurance types that companies being run from home may require.
Reasons To Get Home Based Business Insurance
Lost business supplies, inventory, or equipment loss due to a flood, fire or any other disaster will not be covered by your renters or homeowners policy. As a matter of fact, most policies exclude covering businesses that are run from homes.
You should consider the items that you use on a daily basis to run your business. Perhaps you’re a videographer with expensive gear, a consultant who depends on computer equipment or an accountant with sensitive client data and files. Would you afford to replace these things in case of theft or damage?
Over time, anyone you conduct business with, whether it’s a client, delivery person or vendor, could sustain an injury while on your property. For instance, if a customer comes to your home and slips on the ice on your driveway and breaks their leg or arm, it’s highly unlikely that your homeowner’s policy will cover their hospital bill as the visit was business related.
Covering third-party hospital expenses could hurt both your business and bank account if you do not have the right insurance coverage.
Conventional rental and home policies are unlikely to cover any unforeseen legal expenses pertaining to your home-based business, like claims of libel, negligence, or even IP theft. For instance, if you store business data at home and there happens to be a technological failure or security breach, a client might sue you. Unfortunately, small businesses are easy targets for lawsuits and so, it is imperative to have proper protections in place.
Insurance Options For Home Based Businesses
In order to determine which business coverage will work best for your case, you need to consider the type as well as the size of your business. You should ideally take a look at your current policies and see what is and what’s not covered. That being said, here are some common home-based business insurance options to consider.
General Liability Insurance
This is a policy that protects you and your business from an array of claims including accidental damage to your vehicle or property, claims of slander and libel, as well as the cost of defending lawsuits.
Most entrepreneurs and business owners carry this policy no matter where they’re based and as an independent contractor, it is essential to have a form of general liability insurance so that you can protect your livelihood. This form of insurance is relatively cheap, ranging between $200 and $500 annually for a $1 million policy.
In-Home Business Policy
Also known as an endorsement, the in-home business policy provides more extensive coverage. It typically covers up to $10,000 in claims for a cost of $250 to $500. The specific coverage for this kind of policy will vary depending on the insurance provider that you work with. However, most include the reimbursement for loss of important records and papers, off-site business property as well as accounts receivable. This form of insurance is an excellent starting point for self-employed people.
Rider to a Renter’s or Homeowner’s Insurance Policy
This policy is ideally relatively cheap, about $100 per year for $2,500 of claims coverage. Depending on your state and the available options, a rider may provide a small amount of liability coverage and protection for your equipment.
If you run the business on your own, do not own expensive equipment and clients do not come to your home, then this might be an excellent choice for you. However, since these policies do not offer much additional coverage, you might end being vulnerable in case of a lawsuit, natural disaster or accident.
Business Owners Policy
This type of insurance more comprehensive coverage, over $10,000 and combines and an array of policies like professional liability and general liability into a single package. A business owners policy will protect you from interruptions like a power outage or a natural disaster that could destroy your business data or equipment. It ideally protects against professional liability and malpractice claims.
This policy is an excellent solution for businesses that are run from home, particularly if the operation is done in more than one location, clients come to the home or even if the owner uses their personal car for business operations.
As an independent business owner, home-based business coverage is just one form of insurance that you should consider. More often than not, clients will require to have specific types of insurance before working with them. A reliable insurance agent who specializes in commercial or business insurance will be able to help you determine which kinds of coverage you need to purchase.
However, when it comes to working with an insurance agent, it is wise to ensure that you are using the right person such as ProcomInsuranceCompany.com. There are numerous agents out there, and not all of them will have your best interests at heart. It is important to check their background, ask how long they have been in business and even their licenses. Only the best agents will help you secure the best deals for home-based business insurance.