These days, many successful entrepreneurs and small business owners operate their businesses from the comfort of their homes. But just because you can run your business wearing fuzzy slippers doesn't mean that it’s not a real business. And as such, it needs to be insured just like any other brick and mortar operation.
It's important for small business owners to know that neither homeowners’ nor renters' insurance policies cover home-based businesses. Therefore, if you run a business out of your home, it's wise to work with an insurance professional who can provide you with more details on the kinds of home-based business insurance that’s available for your business.
The type of coverage you need for your home-based business will depend on your business or industry. Some types of home-based business insurance include:
Business Property Insurance – If you use any kind of equipment to run your home-based business, including a computer, fax machine, printer, furniture, etc., you should have business property insurance to be insured against loss or damage to property used in your business. That’s because your homeowners' policy doesn't typically provide coverage for business equipment losses by fire or flood. Instead, you'd need business property insurance.
Liability Insurance – If you have clients or other visitors come to your house for business purposes, then liability insurance is necessary. Liability insurance protects you and your business from being liable for damages caused to another person or property. Again, your homeowners' policy won't protect you from claims made from business visitors who may have been injured at your home-based business. For example, if someone making a business delivery to your home slips and falls, you'll need liability insurance, not homeowners insurance, in order to be covered.
Professional Liability (Acts Coverage) – Similar to professionals working out of their home, professionals working inside their home need professional liability insurance. If you’re a consultant or working professional, professional liability insurance can protect you against potential negligence or failure to deliver claims made by your clients (or patients).
Product Liability Coverage – If you run a business that makes or supplies a product, speak with your insurance professional about product liability coverage, which protects your business for damages to property or a person caused by a product you designed, manufactured or supplied.
Business Automobile Coverage – If you need to make (or pick up) deliveries, visit clients or otherwise use a vehicle for business purposes, your personal auto policy won't cover the business use of the vehicle. Instead, you'll need business automobile coverage, which will provide coverage if you are in an accident.
Other Coverages – There are other home-based business insurance coverages that may be important, depending on your business. For example, if your business has employees, you may need workers compensation insurance. Commercial crime insurance protects against losses from equipment theft, fraud and other crimes. Furthermore, endorsements and riders on homeowners' policies in addition to specialty home and office policies are important coverages that small business owners should consider.
So, does your home-based business need insurance? Based on the plethora of potential business liabilities, you’re probably better off having at least a combination of a few policies in place, depending on your business needs. And that could be one less thing to keep you up at night—even if it is in your home-office.
BOLT (Business Owners Liability Team) is a national insurance agency exclusively dedicated to protect small business owners and is licensed to do business in all fifty states. BOLT agents help business owners choose the right insurance products to fully protect both their businesses and themselves. Get a free business insurance quote comparison online.