What Insurance Coverage Does a Home Based Business Need?


Getting a home based business off the ground entails many of the same concerns and considerations as any other startup, including the purchase of proper insurance coverage. Unfortunately, many company owners are under the false impression that a home office doesn’t entail the same risk associated with other settings. Few things could be further from the truth.

What’s in a Name?

One of the biggest mistakes made by new, home based business owners is failing to buy a insurance coverage policy naming their business as the owner of record. Remember, even if you are a sole proprietor, it is important to distinguish between you and your company. Set aside a special area, use the same name and implement other standard operating procedures designed to differentiate your work office from personal use of the home, equipment and other assets.

Home Is Where the Hazards Are

Working from home often entails many unique hazards. Home based sole proprietors owners routinely tackle everything from the plumbing to computer-related repairs on their own. Disability insurance may be especially important, not only to counter the risk, but to help defray expenses associated with the loss of income should an injury or accident occur.

Beyond the Basics

For a home office owner, it is imperative to keep good records and insurance plans for all company-related equipment. Standard homeowner policies typically exclude the company use of computers, cell phones and other technology. Instead, stand-alone policies can help provide protection against everything from equipment failure to unexpected emergencies. It’s also a good idea to add a loss-of-income and enhanced liability protection to guard against unanticipated events.

Other Forms of Coverage

Following are some other important forms of insurance coverage for a home based business:

Inventory: Working from home is convenient, but don’t become complacent when it comes to storage. Protect your investment by insuring inventory and business-related equipment separate from personal belongings.

Liability: Whether you are a private consultant or full-time eBay business, running a small home office often entails risk. Protect yourself and your business by purchasing additional liability coverage specified to your individual needs. If you work with client data or confidential information, be sure to ask your agent about coverage options that include data loss or theft provisions to protect you and your clients.

How to Get Started

Following are some things to consider with purchasing home based business insurance coverage:

Assets: Make a list of current coverage needs and compare against those supplied by a spouse, other employment or outside providers.

Be Realistic: It may be tempting to “self-insure” equipment or convince yourself data loss is unlikely, but it’s important to be realistic. What situations are you most likely to encounter in your type of business? What are the consequences in a “worst case” scenario? Which could you survive, and which would potentially put you out of business?

As long as you follow these suggestions, purchasing insurance coverage for your home based business is relatively simple. XB8QT4DK73PX