It’s no secret that many, if not most, new small businesses and start-ups are home-based. The days when a “virtual office” sounded new and hip are long past, and it’s practically expected that new enterprises begin as home-based businesses.
It’s a great way to save money while engineering those critical first operations and gaining traction in sales. But is there a difference in insurance for home-based businesses vs. commercial office space?
You may believe that renters’ or homeowners’ insurance policies cover home businesses, but they may not – which means that if there’s a fire at your home and it consumes your home office it’s possible none of those office losses would be covered.
In fact, using your home for activities your insurer isn’t aware of – like operating a home based business – could even invalidate your homeowner’s policy.
To protect your computer, fax machine, copier, furniture, and printer you may need separate small business insurance.
The same holds for your automobile. Personal auto policies may not cover autos used for business purposes, so you may need separate business coverage.
So what small business coverage might you need?
For those of you running a business from your home, it’s important to work closely with an insurance provider that understands small business needs and can help navigate the difference between available insurance and what your particular small business needs. You want to make sure you get coverage that’s right for you. Ask yourself these questions to begin getting an idea of what you need:
Does your business supply, manufacture, or create a product or food?
Do you provide a professional service?
Will clients ever come to your home?
Will you use a vehicle for any business purposes?
What kinds and types of electronic equipment do you need to do your work?
These questions and others can help identify what types of coverage your home-based business needs. As a general rule of thumb, you need professional liability insurance and general liability insurance. Professional liability insurance (also known as errors and omissions insurance or E&O) protects you if your business is sued for negligently providing services, even if you haven’t made a mistake.
A general liability policy can protect you against claims of bodily injury (libel and slander claims), damage to other people’s property, and damage to premises rented to you such as a temporary office space or training/conference facilities.
Depending on your circumstances you may want to add a business owner’s policy for home-based businesses.
A business owner’s policy (also known as business owner insurance or BOP insurance) combines general liability coverage with protection for your business equipment, such as computers, printers, copiers, and office furniture.
Whatever coverage you decide to get, be sure to select a business insurance partner that really understands small business. Some, including Hiscox, may offer policy discounts for home-based businesses in certain professions.
Since you’re home-based, fewer people will visit your place of work, which lowers your risk of accidents, which may result in lower general liability premiums. The right insurance provider will also offer coverage specific to your profession.
Now that you know you need small business insurance, go out there are get it!