If you run a business from your home, you may assume that your home insurance will cover everything, any catastrophic issues your property could encounter. Unfortunately, making an assumption won’t protect you from the realities of life.
Getting the right insurance for your home-based business will help you stay in business and continue making sales if the unexpected happens. So, scrutinize your situation to decide if you need business insurance coverage.
Home Insurance When Working From Home for Someone Else
If you’re working at home from someone else, you will most likely not need additional coverage beyond your standard home insurance policy. Your employer should carry business insurance that protects employees, whether working in the office or remotely.
Just keep in mind that your home insurance policy likely has limits on how much electrical equipment damage they’ll cover. If your computer and equipment belong to your employer, you may not need to worry about that, but if you own your equipment, you may need to consider increasing coverage for electronics.
Business Owners Policy for Home-Based Business
If you own your company and work from your home, you won’t have additional protection from your employer because you are that person. So, you must evaluate your business risks.
Property Damage Risks at Home
If you have expensive equipment or keep inventory in your home, in addition to managing your inventory and equipment, you’ll need to consider whether you can afford to replace losses if your business materials are damaged, destroyed, or stolen.
Home insurance policies are designed to cover the average homeowner’s risks and won’t protect business property. So, if something destroys your business property in your home, your home insurance won’t cover those losses, but a business policy would.
Personal Liability Risks for Home-Based Businesses
In addition to property damage risks, there’s a risk that you could be sued.
Communication with clients is one of the most critical components of successful sales, and for home-based businesses, often that communication happens best at the business owner’s home.
Once again, a home insurance policy is designed to cover normal risks, like friends coming over. If they trip on your steps and break their ankle, your home insurance should cover their injuries. However, if you’re meeting clients at your home and someone hurts themselves, that’s outside the scope of a standard home insurance policy.
You’ll need business liability insurance to protect yourself from that risk. Additionally, if you have sensitive client information, you should have cyber insurance to protect you from lawsuits following a data breach.
Auto Insurance When Working From Home
Another insurance component to consider when working from home is auto insurance. If your home-based business does not require you to travel for work, you don’t need commercial auto insurance. However, if traveling is a necessary part of what you do for work, you’ll need car insurance for business use of your vehicle.
Like home insurance, auto insurance policies are designed for personal use. However, driving for business increases your risk. Additionally, it puts your entire business at risk. If you cause a crash, the other party could come after your business to recoup their losses.
Home Business Insurance Costs
While business insurance can be expensive, if your risks are relatively low, you won’t pay nearly as much as a bigger corporation would pay.
Comparing quotes will help you find the best insurance policy for your situation so you can keep your costs low. And keep in mind that your business is worth protecting and insurance is one of the best ways to protect it.