How To Make Sure Your Home Business Is Properly Insured
by Abdul Aziz Mondal Business 25 February 2023
Have you recently started running a business out of your home? No matter what your business is, running a home business means you may need to update your home insurance policy to make sure that you are properly covered.
How A Home Business Affects Your Insurance
Fires can happen to anyone at any time. From accidental cooking fires to faulty wiring, house fires are rare but never impossible. Everyone needs to have home insurance for fire, or else they can face steep financial consequences in the wake of a loss.
Unfortunately, many home insurance policies have exclusions for home-based businesses. That means that if you are operating a home-based business or even just working from home, the insurance company could reject your claim, even if there is a legitimate loss.
Having a claim rejected can be financially devastating, especially for a major loss. You can be on the hook for tens or even hundreds of thousands of dollars, a cost that many cannot afford.
While it is expected that employees working from home may see more leniency, if you are an entrepreneur running a business that you own – or even storing business equipment and inventory in your home – you need to make sure your home insurance policy will cover your business.
What Does Home Business Insurance Need?
Home insurance policies typically do not cover business activities because the costs and liabilities can be very different. You will need a home business insurance policy to cover the loss of specialized equipment, inventory, and liability.
You can often get home-based business insurance through an extension or add-on to your existing policy. These are the types of coverage your business will likely need to make sure you are adequately covered.
1) General Liability
Your standard home insurance policy covers your liability if someone is injured on your property. This includes guests but not business clients.
General liability for a business should cover both injuries to clients when they are on your property and injury to a customer or damage to their property caused by a product or service you offer. The risks and extent of the costs can be much higher and will not be covered by your standard home insurance policy.
2) Equipment
Different businesses can require a lot of equipment, and you do not have to run your business out of your home to need insurance for it. Contractors and trade workers may want to look into special coverage for their equipment while they store it at home.
Equipment includes any tools or technology you use to make products or deliver your service. This does not include the products themselves, which would be considered merchandise.
3) Inventory and Merchandise
A home business insurance policy should cover inventory and merchandise if you make and sell products based out of your home. With the rise of e-commerce businesses that people operate in their homes, this can be invaluable coverage.
4) Contents
Business contents refer to things that are not inventory or equipment. This includes desks, computers, office furniture, printers, and other things that you use for your business but does not fit into either of these other two descriptions. It could include the contents of your home office.
Business insurance is a must-have if you are an entrepreneur based out of your home.
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