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 home is attractive to many people. But, running a home-based business without proper insurance could have serious consequences. In this article, learn more about insuring your home-based business and why it’s so crucial.
Homeowner’s and Tenant’s Insurance Isn’t Enough
While you may think your home-based business doesn’t need more than regular homeowner’s or tenant’s insurance, this isn’t the case. These policies usually only offer very limited coverage for business property and activities.
A homeowner’s policy isn’t intended to cover the unique liability risks associated with operating a business. For example, it won’t cover professional, trade-specific equipment, stock, or merchandise. As a result, you should consider the risk of bringing these items outside your home. If they get damaged or stolen, a regular homeowner’s policy won’t cover those losses.
Your Liability
Liability is perhaps the greatest risk associated with your home-based business. What if a client falls while walking up to your home? What if you’re sued because of problems with the product or service you provided? Failing to account for these scenarios could have huge consequences. What you think you’re saving by not paying for an additional insurance policy is nothing compared to what you could lose.
To minimize potential losses, create a comprehensive risk management plan for your home-based business. This plan will provide a clear and structured approach to identifying risks. It doesn’t need to be complicated. Start by asking yourself these three questions:
- What can go wrong?
- What will you do to prevent harm from occurring and how will you respond to harm or loss?
- If something happens, how will you pay for it?
From keeping all walkways in and around your home clear 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 protect against direct financial loss but also help safeguard your reputation.
Where Should You Start?
The best way to start is by connecting with your insurance representative. Inform them about your home-based business and ask what kind of coverage you need to protect both your business and your home. Proper coverage will help minimize risk and maximize the many benefits of being your own boss.
Read more about at-home business coverage in our article, Why You Need Insurance if You Operate a Home-Based Business.
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