As of 2010, the number of home-based businesses operating across the country grew to over 38 million, according to the U.S. Census Bureau. The freedom of a home-based business may lead some people to believe they don't face the same risks as a small business. However, operating a home-based business can leave you vulnerable to loss and liability that is not covered by your homeowner's insurance.
Following are five reasons you may need to consider additional insurance for your home-based business:
You have expensive equipment
Whether it's vital electronics or essential stock items, home-based businesses must take extra care to protect products and equipment. While homeowner's policies specifically exclude business property kept in the home, a business policy will provide coverage for office contents, including equipment and stock.
Clients visit you in your home
In addition to insurance for valuable equipment, it's important to make sure you're covered by liability insurance. If clients, employees or delivery people are injured on your premises, you may be held responsible. Something as simple as a slippery front step can result in major injury and, therefore, major financial damage if you're forced to cover medical expenses. Liability insurance can help protect you from these costs.
Damage to your home could cause you to lose business
If your business is run out of your home, residential problems that would normally not affect a business can become major issues. For instance, fire or flood damage will not only affect your property, but could also damage your business equipment and force you to relocate. In such situations, business interruption coverage is vital to keep you financially solvent and help you get your business back on track. Even something as innocuous as fumigation or home renovations may cause you to temporarily move your base of operations. Keep this in mind when considering business interruption insurance.
You use your car for business
If a business owner's personal vehicle is used for business matters, it's important to make sure it has the proper insurance. Additionally, hiring employees to make deliveries for you in their own automobiles can make you liable for any accidents they may have on the road. Non-owned automobile liability insurance may be a necessary step in order to protect your finances.
You employ people
While in-home business policies can protect your home-based business in a number of ways, business owners should also understand what the policies don't cover. Life insurance, workers' compensation and business-vehicle insurance are not covered by these types of policies. If your home-based business grows and expands, it's vital to make sure your insurance keeps pace.
Home-based business owners should speak with a HUB International specialist to decide what their needs are and what kind of policy can ensure their business continues running smoothly no matter what situation arises.