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Does Your Home Business Need Insurance?

Whether you, occasionally, drop some loose change into a one-armed bandit or place regular bets at the track, the odds are that you wouldn’t gamble more than you can afford to lose. Why, then, would you risk operating a home business without properly insuring it first?

You likely wouldn’t–unless you didn’t realize what was at stake. Here are a few convincing reasons to play it safe when it comes to business insurance.

Your Assets are at Stake

If you are operating under the assumption that your business equipment will be covered by your home insurance policy, you are mistaken. In fact, some insurance companies state that running a business from your home actually violates your home owner’s policy terms.

If your business equipment is lost or damaged due to a robbery, vandalism, or fire, for instance, it is unlikely that your insurance policy will reimburse you for your loss–a loss that can be quite sizeable, particularly if your business requires a lot of equipment or on-hand inventory. Entrepreneur’s ‘Insure Your Business’ warns that a graphic artist, for example, can easily have $20,000 in computer equipment and software in the home–amounting to a significant financial risk.

Furthermore, if you have borrowed money to finance any of your equipment, you are likely required by your loan agreement to insure the chatteled property.

You Could Get Sued
Your homeowner’s policy will not protect you from liabilities that are a result of business-related activities. Yes, if your favorite UPS worker slips on your stairs–and they’re delivering a product or document related to your business–your standard home insurance will not pay out. And you could find yourself in financial ruin.

If you are in the business of offering a service such as financial, accounting, or legal advice, you can also find yourself party to a lawsuit. This ICA Home Inspection Podcast, for instance, examines the need for liability insurance for individuals in the Home Inspection business.

If your business requires you to handle or store sensitive client information, Allstate warns that security breaches and technology failures could leave you vulnerable to lost income and client lawsuits. Again, the right policy can shield you from tremendous loss.

Driving can be Hazardous
It is also important to ensure that any automobiles used for business are properly insured. If not, you could be held personally liable for any accidents that take place, adding up to hefty bills for property damage and personal injury claims. Plus, any equipment stolen or damaged within a company car may not be covered either.

Weather is Never a Safe Bet
No one can predict weather–not even the weather man. With meteorological enemies like tornadoes, flash floods, hurricanes, and lightning, your business could find itself vulnerable to the whims of Mother Nature. And, this could mean a lengthy interruption to your business and lost income. Without business interruption insurance, this could spell financial disaster.

Peace of Mind is the Best Reward
If you are plagued by persistent worries over liabilities and potential losses, you will not be able to fully focus on growing your business. The right business insurance can give you greatly needed peace of mind and enable you to direct your time, energy, and resources into making your company a success.

While embarking on any new business venture is a gamble, you can take measures to mitigate risk. Acquiring the right insurance to meet your home business needs can greatly improve your odds of creating a thriving home business.

What are some of the risks that a business can face if it is not properly insured?

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