The number of home-based businesses is growing quickly each year as more people are tapping the power of the Internet for money-making opportunities. Whether stay-at-home parents are signing up for direct-sales companies or veteran business owners are choosing virtual stores instead of brick-and-mortar storefronts, more people are working from home than ever. However, along with a set-your-own schedule and the ability to work in pajamas, there are some liability issues that could arise with a home-based company. Let’s take a look at insurance and why you want it for your business.
Many people believe that if they already pay for homeowner’s insurance, their business belongings in the home are covered as well. In lots of cases, this is not true. In fact, some homeowner’s policies may explicitly exclude business-related claims, such as theft of property or personal injury. You may think your business is too small to warrant additional coverage, but even if you just have a computer you use for work, it’s likely you could benefit from the extra policy. Renters, too, should consider additional coverage because renter’s insurance has many of the same shortcomings as homeowner’s insurance.
The amount of inventory or business equipment a home-based operation might involve varies by the industry. However, you probably have a computer you use, maybe some products that you are storing or equipment that you use to make whatever you are selling. Here are some of the risks you face in having these items in your home without the proper insurance:
- A thief could break in and steal equipment, electronics, cash, or products.
- A house fire could destroy your entire business operation.
- Anyone delivering materials or supplies to your home who gets hurt on your premises may file a liability claim.
Be Clear About Terms
When amending or upgrading your homeowner’s insurance policy to protect your business items, be sure to specify that you want replacement values assigned to belongings. Otherwise, you might just get the used value of business items, which likely will be too small an amount to replace what you lost. Included in this category are things such as specialized company software that may cost hundreds of dollars to replace if your computer is stolen. Or, if you have customized tools you use to make products, be sure to assign an accurate value to those in the policy so you can afford to buy new ones if something bad happens to them.
No matter what kind of business you run out of your home, you’ll likely need the protection of some kind of liability coverage. This will cover personal injuries that happen at your house or in the process of a business-related activity. You could also ask your insurance agent about:
- General liability for incidents that happen away from home
- Professional liability insurance if you offer a professional service
- Product liability coverage if you make something that could injure someone
- Worker’s compensation coverage if you have employees who work in your home
- Business automobile insurance if you get hurt while driving around on business
There are a few insurance companies that have recognized the growth in home-based businesses and have created policies that offer business coverage and homeowner’s coverage all in one package. This route can be less expensive than if you simply added multiple riders onto your homeowner’s policy to cover your business needs. However, as with any policy, you should be sure to read the details closely to ensure the all-in-one policy includes all the stipulations you require.
Adjusting your insurance when you run a home-based business is a crucial step in preparing your company for the future. Don’t wait until something goes awry to get this task done; talk to your insurance agent today.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.