Why Your Home-Based Business Needs Business Insurance.
1. You’re an Accountant and accused of malpractice.
2. You’re an Consultant or working Professional and accused of negligence or failure to deliver to your clients (or patients).
3. You’re a Hairdresser and are sued over an allergic reaction.
4. If you run a business that makes or supplies a product, you may get sued for damages to property or a person caused by a product you designed, manufactured or supplied.
5. If you use any kind of equipment to run your home-based business, you should have business property insurance to be insured against loss or damage to property used in your business.
6. If you have clients or other visitors come to your house for business purposes and slips and fall, you’ll need liability insurance.
7. If you need to make (or pick up) deliveries, visit clients or otherwise use a vehicle for business purposes you’ll need business automobile coverage, which will provide coverage if you are in an accident.
Does Homeowners Insurance Cover Home-Based Businesses?
If you’re working from home, your homeowners or renters insurance provides some degree of protection. Unfortunately, that coverage is woefully inadequate for most home-based businesses.
Typical homeowners insurance policies limit coverage to:
- $2,500 for business equipment located on your property
- $250 for business equipment off-premises
Without sufficient insurance coverage, you’re entirely responsible for the cost of any claims made against you or your business. You’re also on the hook for your own legal defense and the cost of any potential settlements or judgments made against you. This could jeopardize the existence of your entire company.
What About Auto Insurance?
Your personal car insurance policy may provide some coverage for business use of your vehicle, but there are exceptions, such as:
- Transporting goods or people
- Vehicles (other than cars covered by your policy) being sold, maintained, repaired, stored, or parked as part of your business
- Other certain activities (depending on your insurer), such as delivering food, newspapers, or other items in exchange for compensation
In general, personal car insurance covers you if you’re driving between clients or picking up supplies. However, if your business is based around your vehicle, you likely need a Commercial Auto insurance policy.
So, does your home-based business need insurance? Based on the plethora of potential business liabilities, you’re probably better off having at least a combination of a few policies in place, depending on your business needs. And that could be one less thing to keep you up at night—even if it is in your home-office