Though it may be difficult to imagine, the U.S. Small Business Administration says that more than half of all businesses in the U.S. are operated out of the home of the business owner. Regrettably, some of those home-based business owners feel that they don’t require any special insurance policies to defend their business from the liabilities they are exposed to everyday as a normal part of their company’s activity.
Some assume that is because their homeowners insurance will protect them, while others don’t realize how vulnerable to liability they truly are.
Comprehending the need for insurance for home-based businesses is critical, and it’s something all home-based business owners should determine before the policy is actually needed. If you are a home-based business owner, here are some examples of insurance to consider:
Workers’ compensation coverage
If you have employees, then you may be forced to have workers’ compensation insurance. Workers’ compensation insurance guarantees that your employees can recover some part of their income if they can’t work as the result of an injury that occurred while on the job. Because you are accountable for maintaining a safe workplace for your employees, workers’ compensation insurance protects your business from being taken to court if an employee were injured while working. So even if your company is small enough that you are not legally required to carry it, this is still an important coverage to consider.
General liability insurance
If a client or customer were to come into your office, your business would be responsible for any injuries they obtained. Likewise with employees who work out of your home with you. Your company could even be liable if a delivery person with a package for your company were injured while delivering it. It is important to acknowledge that your business is liable for these injuries. Of course, that really means that you are liable – but not on a personal level. Your home insurance covers the personal liabilities you have when a friend or guest is hurt in your home. But most homeowners policies exclude those liabilities related to the operation of a home-based business. A business liability policy (also called a general liability policy) can be obtained separately in order to provide enough liability protection. In some instances, endorsements can be added to your homeowners insurance policy to allow it to cover these business liabilities.
Commercial property insurance
If your home is burglarized and your personal items are taken, then your homeowners policy will generally compensate you for your losses. But if your business articles are stolen from your home, it is doubtful that the homeowners insurance policy will cover their loss, unless you've had that particular provision built into the policy. Instead, a commercial property insurance policy that protects your business property could be applicable.
Depending on the profession you work in, you might need a professional liability policy. These protect you against liabilities specifically encountered by individuals working in your profession. Those liabilities can include errors and omissions insurance for those in the financial industry, malpractice insurance for those in the medical field, or the more generalized professional liability insurance.
As a home-based business owner, with a little time and some proper planning, you can position yourself to minimize or avoid insurable risks that could harm your bottom line. Contact us today to see how we can help!
This article was prepared with a report from Insurance Technologies Corporation. Image courtesy of cuteimage/FreeDigitalPhotos.net.