Your homeowners or renters policy won’t protect your business assets.
Are you thinking of starting a home-based business? Maybe you’re already an entrepreneur, like 30% of millennials, 20% of Gen-Xers, and 11% of baby boomers.
If you’re just starting your business from home, you’re probably thinking about things like ergonomics, the best space in your home for your office, and what rates to charge for your services. If you already have an established home-based business, profit and loss are probably at the top of your mind.
One thing few freelancers, e-commerce entrepreneurs, and other work-from-home business owners often forget about is insurance, and it’s important. You have to protect your assets, employees if you have them, reputation, and data. So what kind of insurance do you need for your home-based business? Let us explain.
You might think you’re already covered, but you’re not
If you have homeowners or renters insurance, it’s important to know that they don’t cover your business assets or any liability stemming from your professional actions at home.
The average cost of a small business lawsuit is $54,000. Do you have that much money just lying around? With the right type of business insurance, all you’ll have to pay is a deductible, and your insurance will cover the cost of litigation and restitution.
Common types of home-based business insurance
Depending on what type of business you’re in, you may or may not need the following types of coverage:
- Property insurance
You’re probably using a computer and printer for your business, and you might also have a fax machine. Business property insurance protects you in case of loss or damage to any property you use for business. Homeowners insurance alone doesn’t usually provide coverage for business equipment you’ve lost due to fire or flood.
- Liability insurance
While your homeowners insurance helps protect your home and family, it won’t protect you if a client or business associate visits your home office and gets injured. If your client slips on a throw rug and falls, for instance, claims against your homeowners insurance won’t be honored.
- Professional liability
If you’re a freelancer, consultant, or home-based health agent (such as a massage therapist), you need professional liability insurance. This insurance will cover you against any negligence claims and protect you if you fail to deliver on something you promised.
- Product liability
If you make or supply any sort of product, make sure you discuss product liability coverage with your insurance agent. This type of insurance protects you and your business against damage claims caused to property or people by a product you designed, made, or distributed.
- Automobile coverage
It’s important to note that your personal auto policy won’t cover you when you’re using your vehicle for business purposes. That could include picking up supplies, making deliveries, visiting clients, or even taking them to lunch. You’ll need business auto coverage to be protected in the event of an accident.
- Other types of coverage
Depending on the business you’re in, and whether you have employees, you might need the following types of coverage:
- Commercial crime insurance This protects you from theft, fraud, and other crimes against your business.
- Workers’ compensation insurance This is mandatory for most businesses that have employees.
Cyber liability insurance: do you need it?
Even if you haven’t been a victim, there’s no doubt you’ve heard about cybercrime. You may associate it with big businesses and retail stores that suffer data breaches, but all businesses should think about cybersecurity.
If someone accesses and steals client data from your computer system, or infects your computers with a virus that wipes data, it can be very expensive to fix, which is where cyber liability insurance comes in. You’re not immune if your business is small. The U.S. Small Business Innovation Research program says that 50% of small- to medium-sized businesses are victims of cybercrime annually. And once attacked, 60% of those businesses will fail within six months.
That’s a scary prospect. If you have sensitive or proprietary client data, discuss a cyber liability policy with your insurance agent. In the case of a security breach, without a cyber liability policy, you could face hundreds of thousands of dollars in legal fees for:
- The costs of hiring an independent IT professional to investigate the incident to discover:
- Who is responsible
- How they got in
- What they wanted
- What they took
- How widespread the attack is
- The costs to notify your clients of the breach. There are U.S. government regulations covering data breaches that tell you when and how to disclose breaches.
- Any costs to help your clients recover their identity and reputation
- The expenses to restore compromised data
- Operational downtime expenses
Insure your home-based business for peace of mind
Insurance for your business means you’re prepared for burglary, cyber crimes, potential accidents, and pretty much anything else that comes along to disrupt your business. It’s as necessary as hiring the right employees and providing quality services and products to your clients.
It’s the best way to be confident you’re protecting yourself and your business.
Your best strategy for figuring out what kind of insurance you need is to contact an insurance professional – they’ll have the full details on what coverage you need for the type of business you’re in.
Avante Insurance: policies to protect your home-based business
Don’t risk it all by not insuring your home-based business.
At Avante, we’ll discuss your business needs and build the complete coverage plan you need, whether you’re a freelance graphic designer or bespoke clothing tailor. Contact us today.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.