Home Sweet Home – Insurance Issues for Home-Based Businesses

The joy of owning your own business! I love the freedom of working remotely as a solo practitioner consultant. I don’t have to pay rent, there are no office politics, and there is no need to wait in line for the restroom. My commute takes five seconds and I love it. There is no traffic except my dogs.

Insurance may not be an important consideration if your business is one of many home-based enterprises that are growing with the advancements in technology. Building insurance is not mandatory. You might not even use your car for business purposes beyond driving to appointments. However, the reality is that there are many exposures you might not have considered, and that are certainly not adequately covered by your homeowners insurance.

I’d like to bring your attention to three important areas for home-based businesses:

1. Liability

Are you a consultant, author or another professional who gives advice? Professional liability insurance may be required. You may be sued for information or words you have spoken. Don’t get caught without professional liability insurance. I recommend a limit of $1,000,000. This type of insurance is offered by many companies, so it’s worth speaking with a broker to learn more or checking the Internet. You should be aware that it is not inexpensive, but neither is a lawsuit.

Are clients or vendors allowed to visit your home office? Personal liability coverage does not cover business-related activities. Your business may require a business owner policy (BOP). This can help protect you from liability and often come at a low cost.

Let’s talk auto. Even if your only purpose is to drive to meet with a client at your location, your business can be exposed when you are behind the wheel. How? How? If your business is incorporated, make sure you include Non-Owned & Hired Auto Liability on the General Liability portion of your BOP.

You can still obtain a General Liability insurance even if you are not eligible for a Business Owners Policy (BOP) due to the type of business that you run from your home.

2. Property

Every home-based company will have business property. You must insure your business property, regardless of whether you have items in your garage or furniture at your office. This limits the value and protection of your business assets. The BOP, which was mentioned earlier, can be used to adequately insure your computer and furniture as well as inventory and artwork.

3. Life and disability

Hopefully your overheads are low and your income is increasing. Get disability insurance to ensure you can maintain your income and life insurance to protect your family. Ask your accountant about how to make these policies business expenses through your business.

It is more likely that you will become disabled than die when you reach 65 years old. You could lose your ability or become dependent on your work. Although most disability carriers require two years of business experience before they offer this policy, that shouldn’t stop people from exploring it.

Now is the time to do your homework. Even though you may work remotely, it doesn’t mean that you won’t be at risk of losing everything. As any business would, think about what could happen to your business and then make arrangements to transfer that risk to an insurer. For lower costs, increase your deductibles as much as possible.

An insurance consultant can help you understand and address your needs. I am not an insurance consultant. I assist businesses in finding the best insurance at the best price and help them position themselves to make the most appealing to insurance companies.