What Types Of Business Insurance Do Home-Based Businesses Need?

If you’re running a business with your home as the base or headquarters, you’re still liable to a lot of risks. You’d be getting great benefits from this sort of setup, including a less stressful environment, no commuting time or costs, family time, etc.

However, a home-based business is still a business and needs to be insured against any loss, damage, or theft.

The policies surrounding renters and homeowners usually do not take home businesses into consideration. If you have a personal auto insurance policy, it wouldn’t cover the vehicles you use for your business.

In fact, most personal insurance policies would exclude your home business coverage. You also have to determine whether your community can even allow proper home-based businesses or not.

If you want to continue running your business and have it insured, you should get an insurance professional on board. Explain your setup and operations to them and see how much coverage you can or should get.

What Coverage Do You Need?

First, you should take a look at the kind of business you’re running, plus the equipment and other aspects that make it all happen. Gather the documents you need to show your expenses, profits, costs, wages, etc. It would help if you clarified the points below as well:

?   Does the business deal with foodstuffs in any way?

?   Do you use a vehicle?

?   Do you use electronic equipment solely for the business or is it also used for personal purposes?

?   Do you provide professional services?

?    Would you have business visitors dropping by your residence?

When you have the answers to the above questions, you would have a clearer idea of what kind of insurance coverage your business requires.

Business Property Insurance

You would find that your home-based business certainly does need an insurance policy for business property. This sort of insurance would protect you against any losses or damages to everything that you utilize in your operations.

For instance, if a fire burns down your home office, along with your computer, fax machines, copiers, etc., you would probably not be covered by your homeowners' policy. You need a separate policy covering your business property.

You would also have to make a choice between ACV (actual cash value) coverage and replacement cost coverage. As with most business, you should try to budget for a replacement cost coverage, since that would give you the most protection. In any case, you should definitely double check to make sure that your electronics are covered under your policy. ACV policies could incur lower premiums but they also give lower settlements.

Liability Insurance

There might not be much chance of anyone suffering a loss or damage within your house and suing you for it. However, liability insurance is necessary if you have clients visiting your residence. This may be the case with makeup artists or personal trainers. For other kinds of businesses, such visitors may include delivery people, couriers, or your suppliers.

Professional Liability Insurance (aka Errors & Omissions)

Do you give advice? As a professional working from home, you should have the same insurance for professional liability as someone working from an office. This is a step that you cannot afford to overlook, so make your plans as soon as possible.

You should hence take a look at your existing coverage and work to fill in any holes in it. You may already have some liability insurance from your previous position that came with a regular salary. If this is the case, you should secure the best kind of coverage that would protect you after the precious policy ends. 

This may even involve you insuring a non-earning period, such as when you’re ill or pregnant. In the long term, you would find that premiums are actually cheaper when there isn’t a gap in the coverage.

Product Liability Coverage

The coverage of product liability would protect your business from any damages to any person or property incurred by your products or services. Hence, no matter what you supply, run it by an insurance professional first in order to determine the level of your coverage.

Business Auto

If you have a professional auto policy in place, it would probably not cover the business use you put it to. If you use it for deliveries or to pick up packages and have an accident, your policy wouldn’t cover it. Luckily, business auto insurance is not an expensive option. If you use your car for your business in any way, you need to get coverage for any potential losses incurred.

Other Coverages and Considerations

Since home-based businesses are getting more common, several insurers are now offering special coverages in addition to the regular homeowners’ policies. You may also be able to find other kinds of insurers offering specially-tailored policies for both your home and home office. You should compare these special coverages to getting separate insurance policies for your business.

You may find that certain products offer fewer kinds of coverages and only provide the convenience of being packaged together. Having a separate proper business policy might be a better idea if this is the case.

You should also make sure that your home business is compliant with every regulation, health codes, statutes, and laws. Without this, you may find your coverage rendered null and void. if you employ anyone, you should also follow employment laws. This includes a workers’ compensation coverage as well.