December 2, 2015
Working from home curtails many inconveniences and hassles such as commuting, interruptions by chatty co-workers, and the need for professional clothing, but it does not remove the need to be responsible in your business decisions. While many entrepreneurs have the impression that they should economize on everything, the fact is: business insurance is one of the safest expenditures you can make for the long-term health of your business.
Business insurance is a must for the home-based entrepreneur, because your homeowner’s or renter’s insurance most likely has wording that specifically excludes coverage for any business you run out of your home. You might assume you don’t need coverage for your type of home business, but you’d be surprised what sorts of businesses do require business insurance. Here are several common situations that need a home-based business insurance policy.
1. You Have Expensive Gear that Helps You Run Your Business
Whether it’s devices, computers, or inventory, if you have invested heavily in your business, you need to protect those assets. If a thief makes off with your costly equipment or the weather gods send you a flood that fills your home with unwanted water, the typical homeowner’s insurance will only cover a few thousand dollars of replacement costs. If you had to replace everything required to run your business tomorrow, could you do it? If not, you’re looking at an incident that could wipe your business off the map.
2. You Have Extensive Data or Information That Helps You Run Your Business
Your files are your lifeline. You have extensive dossiers on your clients and files that keep your business running. But what would happen if those files were wiped out in a security breach or by a natural hazard? Of course, there are precautions you can take to mitigate this possibility (such as cloud-based computer storage), but you cannot remove the risk entirely. Insurance provides substantial aid in times of profound crisis.
3. Your Business Income Is Instrumental in Keeping You Afloat
If your business went offline due to unforeseen circumstances such as natural disaster or damage to your residence, would you be all right? Or would the lack of income erase all your efforts? As long as you have appropriate business interruption insurance, you can rest easy, knowing that if the worst happens, you’ll be protected.
4. You Produce Products for Consumer Use
Being your own boss has many joys: the flexible hours, the self-directed innovation, the thrill of seeing an idea become a tangible reality, but as a “solopreneur” you also become responsible for all the stones in the path of your business. If a customer claims injury or illness as a result of using your product, you might find yourself in an extensive — not to mention expensive — legal battle, but with proper coverage you can preserve your company’s good name and protect your significant investment.
5. You Deliver or Convey Equipment or Products in a Personal Vehicle
Sure, it doesn’t happen very often, but if you find yourself behind the driver’s wheel, even occasionally, carting around inventory or gear, you might find that you need a commercial auto insurance to protect you, your vehicle, and your inventory. Typically, consumer auto insurance will not cover any damages that occur while traveling on business.
6. You Are Consulted for Advice or Direction
If you’re a consultant who provides guidance or leadership for others and you don’t carry professional liability insurance, you might find that a dispute with a client can torpedo your business. In the event that a dispute cannot be settled out of court, you need not fear lawyer’s fees. Insurance agents and brokers, too, carry coverage that can assist in such a case. A comprehensive business owner’s policy can be customized specifically to your business so that you carry only the coverage you need.
7. You Have Employees
If you have any employees, even if they are seasonal or otherwise temporary, most states do place a legal obligation on you, the business owner, to provide some sort of workers’ compensation insurance. Even if you work with contractors or interns, you are required, in many cases, to have this coverage.
8. You Hire Tradespeople to Assist with Installation or Repairs or Have Goods Delivered Specifically for Your Business
Where does your business end and you begin? The lines can be very gray especially if you’re working from home. In the event you have work done for your business on your property, your business can become liable in the event of injury or property damage. It only takes one instant to undermine everything you’ve worked so hard to create. Proper insurance for your business preserves your investment in times of urgency.
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