More and more people are developing home-based businesses these days; either to earn a bit of extra income, or as their primary source. Many however are making the mistake of not checking to see if their current insurance coverage is adequate for both home and business. This could be fatal for both, especially if you have clients visiting your home for business purposes. One unforeseen accident and subsequent lawsuit could wipe out most small businesses, and if you don’t have the correct coverage, your home along with it!
What To Consider
If you’re operating a home-based business, you’re most likely to have at least a few pieces of business equipment. These could be your computer and printer, paper supplies etc.; but if your small business involves fabrication or manufacturing of some sort, such as a sign painting business or small crafts operation, you may have special machinery as well as costly materials to consider.
Some home insurance policies may cover things like a computer or printer, but special machinery and materials are most probably not. Check with your insurance provider to see if these items can be incorporated into your existing policy or if you need a separate one for your business equipment and supplies.
If your home business is based at your house, or even if you have an office and only work from home occasionally, you will want to check if your current liability insurance covers your business. Most home insurance policies don’t cover third party injuries if they are related to your work. If you have clients visiting you at home regularly, it is crucial that you make sure you are adequately protected.
A third consideration, especially if you keep client data on your business computer, is to ensure that you are protected against data loss. A security breach or software/hardware failure could leave you open to lawsuits and serious financial losses. Your insurer will have an option that will protect you in the event of such occurrences.
Your Two Main Choices
If you are a small one or two person operation, you may be able to get adequate coverage from a rider to your homeowners or renters policy. A rider is simply an addition that is added on to your existing policy. This could be something as simple as increasing the liability coverage in your current policy and increasing protection for your data and equipment.
If you are more than a one or two person operation, you may really want to consider a Business Owner’s Policy. This will provide the most comprehensive coverage for your business and provide you with the peace of mind you need to focus on your operation. You will be protected against damage to data or business equipment, unexpected business interruption, as well as liability or even malpractice claims.
Last but not least, check to ensure that your small business operation complies with all federal, state, and city health codes and regulations. Failure to do so will not just void your insurance coverage, but land you in a heap of trouble with Uncle Sam! Also, if you use your car or another vehicle for business purposes, check that your current auto insurance is adequate!