Running a Home-based business? Be Sure Your Homeowners Policy Has You Covered

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Running a Home-based business? Be Sure Your Homeowners Policy Has You Covered on avanteinsurance.com

Many home-based business owners need one or more insurance policies to protect themselves and their businesses from a variety of threats

According to U.S. government statistics, nearly 30% of American homeowners run a business from their home. However, many of them do not have insurance other than their regular homeowner’s policy– which, in many cases, may not cover all (or any) of their business activities, and in some cases, could even invalidate parts of their existing policy.

Unfortunately, much of the problem seems to stem from a lack of knowledge about how to properly insure a home-based business. In fact, one survey found that four in ten business owners who do not have additional insurance beyond their homeowner’s policy failed to get additional coverage because they believed they did not need it. However, nothing could be further from the case, at least for most home-based businesses.

In addition, it’s important to realize that home-based business insurance can take a variety of forms, depending on the needs of the individual and the business. From general liability to product liability, and professional liability insurance, insurers offer variety of policies that can help you protect your home-based business from a multitude of threats. But how do you know which (if any) you need? Let’s take a look.

General liability insurance can help prevent your business from adverse legal action in a variety of situations

Not every home-based business needs additional insurance– especially if the business generates a very small amount of revenue, has very few clients, and will take on little risk due to its operations. However, the clear majority of home-based businesses, especially when it’s the owner’s primary form of income, will need insurance to protect them and the best place to start is with a general liability policy.

A general liability policy is a home-based business owner’s bread-and-butter insurance policy, designed to protect you, your business, and your employees from a variety of potential liabilities. According to the U.S. Small Business Administration (SBA) most general liability policies cover and protect against things including: “bodily damage, property damage, medical expenses, libel, slander, the cost of defending a lawsuit, and settlement bonds or judgments required during an appeal procedure.” Potential policy buyers can usually tailor the policy to increase or decrease coverage for certain risks that could be more likely to occur.

Additional property insurance may be able to help protect office equipment and any physical business inventory inside your home

If you use expensive office equipment, such as work computers, tablets, printers, chairs, or desks, as a part of your home-based business, it may not be covered by your regular homeowner’s insurance policy. That means if theft, accidents, or natural disasters damage or destroy these items, you likely won’t be able to recover any of your losses. Therefore, it’s important to inquire exactly how your current homeowner’s policy deals with home-based business equipment. If it doesn’t offer coverage, you’ll want to consider purchasing an additional property insurance policy specifically for your home-based business.

Professional liability and product liability insurance can help protect certain types of business from legal threats

If your business deals with life and death decisions, or large amounts of money, you’ll likely want to consider purchasing a professional liability policy. While these are a must-have for professionals like physicians, lawyers, and accountants, they can also protect other kinds of business, such as catering companies, or event planning firms. In general, professional liability insurance is a good idea for any business activity in which an oversight, omission, or error could cause significant financial, emotional, or reputational damage to a client.

In addition, if your business is involved with manufacturing, creating, selling, reselling, or distributing retail products, you may want to consider purchasing a product liability policy. This can protect your business against lawsuits from individuals who have been harmed by a defect in one of your products.

Don’t risk being underinsured– determine what policies your home-based business needs to protect itself from risk

From a simple slip and fall to a complex product liability case, just because you do business at home doesn’t mean you can’t get sued– and your homeowner’s insurance isn’t going to pick up that tab. In addition to lawsuits, home-based businesses can often face disasters like fire, theft, and flooding, which also may not be covered by their traditional homeowner’s policies.

All this means that home-based business owners need to take the steps–and do the research, to make sure that their policies cover their businesses from both general and industry-specific threats. Failing to do so may leave your business at high risk of experiencing a very expensive incident– and without the proper coverage to protect itself.

To learn more about how to purchase the right policies to protect your home-based business, contact Avante Insurance today for a free consultation.