Who hasn’t dreamed of working from home? The prospect of being your own boss, setting your own hours and doing it all in the comfort of your own home seems to fall under the “no-brainer” category. But running a home-based business without adequate insurance can turn that dream into a nightmare.
Many home-based business owners mistakenly believe that their current homeowners or tenants insurance policy will cover their new business enterprise. However, other than providing very limited coverage for defined business property, a homeowners insurance policy is not designed to cover the contents and unique liability risks associated with operating a business. For example, a home insurance policy does not extend liability coverage to clients or couriers visiting your home.
You should also take into account the risk of taking business-related equipment outside of your home. A regular homeowners policy will not cover these losses either.
Liability is perhaps the greatest risk associated with your home-based business. What if a client falls while entering or exiting your home? Or, what if you are sued because of problems with the product or service you provide?
Failure to account for these liabilities leaves you financially vulnerable and risks disastrous results for your home business. The reality is that the legal system is increasingly being used to settle business disputes. The small price of an additional insurance premium pales in comparison to what you stand to lose.
A comprehensive risk management plan for your home-based business minimizes potential losses. It provides a clear and structured approach to identifying risks. The risk management plan doesn’t need to be complicated, but it should answer these three questions:
- What can go wrong?
- How can you prevent the harm or loss from occurring?
- If harm or loss occurs, how will you pay for it?
From keeping all walkways in and around your home clear of snow and ice to keeping your business-related inventory and computers protected from theft and viruses, managing risk is critical to the success of your home-based business. It will not only provide protection against direct financial loss, but also help to safeguard your business’ reputation.
The one of the best courses of action is to inform your insurance representative of your home-based business and ask about the type of coverage needed to protect your business and your home. Proper insurance coverage for your home-based business can help minimize your risk so you can maximize the joys of being your own boss.
Want to know more? Take advantage of Small Business BC’s wide selection of seminars for entrepreneurs and small to medium-sized business owners. Space is limited, so don’t miss your chance to register today.
Plus, don’t forget that you can meet one-on-one with an expert to get specific information that applies to your business by booking an appointment with Small Business BC’s Ask the Expert service now.