Those who operate a home-based business need more insurance coverage than a standard homeowners or renters insurance policy. In fact, most homeowners or renters insurance policies exclude coverage for business-related claims. As a home-based business may provide a substantial portion of a person's income or be the person's only income, protecting these assets is important.
Business Assets
Owners of home-based businesses need insurance coverage to protect a company's assets, such as computers, fax machines and other equipment used as part of the business. Businesses with product inventory will also need insurance to protect this property. Before consulting with an insurance agent about coverage, a business owner should determine the value of the business equipment on hand and what equipment the business may add in the future. Owners may also purchase business interruption insurance that covers lost income because of fires and other events.
Liability Issues
For many home-based businesses, liability issues present a larger potential loss than lost assets. For example, if an accountant has a client coming to the house who falls and is injured, the potential financial liability from the injury may be quite large. Another liability issue for many home-based business owners is providing inaccurate information. For example, if the same accountant gives bad tax advice, the client may sue the accountant for damages. Manufacturers of electronics, candles, food items and other products may also need product liability insurance to provide protection from lawsuits.
Auto Insurance
In addition to insurance for the home, a business owner should make certain to have proper insurance on his automobile if he uses it for business purposes. A business owner should discuss the specific uses of the vehicle with his insurer to be certain to purchase the proper coverage. Also, if the owner has employees who use automobiles as part of the business, a business owner may purchase additional insurance coverage for possible damages caused by an employee's vehicle while working.
Other Considerations
Many insurance companies sell policies that cover both a home and a home-based business. Business owners should compare the costs and coverage of these policies against two separate policies. Even if a person decides to not purchase additional insurance to cover the business, the person should report to her homeowners or renters insurance provider that she operates a business from the home as some insurers may not allow this or will charge a higher rate. In any case, by informing the insurance company of the business, the home owner or renter can make certain to have coverage for the home.
