Insurance for the Home Business

By Compuquotes Team on May 1st, 2008

Business Insurance

Starting a new business is an exciting and hectic time. There are so many things to do to be sure you're in the best position to reach your market, engage them and serve them. It's far too easy to overlook one of the most important needs for your home-based business - insurance. As a small business based at home, you have insurance needs that go beyond the scope of your homeowner or renters insurance. Protecting yourself, your investment, your equipment and your business should take top priority on your list of things to do. Not sure that you need home business insurance? Here's a sampling of commonly asked questions about insurance for the home entrepreneur to help you decide whether or not you need separate insurance for your small, home-based business.

1.Will customers or employees ever come to your home?

Homeowners insurance includes liability insurance to cover medical bills and expenses if someone is injured while visiting your home. That coverage will NOT be extended to cover those who are in your home for business purposes. If you offer services from your home and customers visit your home, or employees come to your home on work-related duties, talk to your insurance agent about extending your liability coverage.

2.Do your services expose you to liability?

Many services that are offered by home businesses may expose the entrepreneur to unexpected liabilities. If your business is a home day care business, the state probably requires a minimum amount of liability insurance to cover any personal injuries that happen while children are in your care, but other businesses also carry liabilities. An accountant, for instance, may be faced with a lawsuit if an inadvertent error on a tax return placed a client in jeopardy. A salesperson could face a lawsuit if a product they sold caused injury. Home business liability insurance is a must to protect your personal finances in case of a lawsuit.

3.Do you have equipment or tools that are necessary to your business?

It can be a mistake to count on your homeowners insurance to cover the loss of business equipment or tools that you keep at home. In the event of a fire, flood, theft or other loss, your insurance company may refuse to reimburse you for any items that were used as part of your business unless you've made arrangements for coverage with a rider or endorsement. Depending on the value of your equipment and its importance to your business, you may even want to go beyond a rider and invest in a home business insurance policy which will cover you not only for the value of replacing lost equipment, but also for income lost until it is replaced.

4.Will you use your automobile for work-related purposes?

If you'll be delivering orders in your automobile or transporting employees or clients in your automobile, personal insurance coverage may not be enough. Even carrying work equipment in your car - like a laptop that you use for business - can expose you to an uninsured risk. If you carry your laptop in your car and it's stolen, for instance, your insurer may not reimburse you for its value if they consider it to be business equipment. The solution? Small business insurance coverage for your vehicle.

5.Do you keep inventory at home?

Many independent agents who sell from home keep thousands of dollars worth of inventory in their homes, either for demonstration purposes or so that they can sell from stock. If that inventory is damaged in a home mishap, your homeowner insurance is not likely to cover it.

6.Do you have an office, workshop or storage room in a garage or other building?

If you work in a home office or workshop that is not in the house proper, your homeowner insurance policy could seriously limit the amount of reimbursement you can claim in the event your equipment or workspace is damaged. Again, a rider on your homeowners policy could be enough coverage, or you might need home business or small business insurance.

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