Home Based Business Insurance:

When you start your own business from home, it is easy to overlook the fact that you will need to purchase additional insurance for your new venture. Your homeowner's policy will not be enough to provide you with the coverage you will now need.

Before deciding on an insurance policy, it is important to understand what your business will and will not require. For example, if you plan to have employees for your home business, you would need to purchase worker's compensation insurance. But, if you are the only employee, this would not be a concern. Likewise, if you plan to have customers visiting you in your home, you would need to purchase more liability coverage than you would if your business was strictly mail-order or over the Internet.

Once you have defined your business needs, you will be ready to move on to the myriad of insurance choices that are available for small business owners.

Property Insurance

Although you may have a homeowner's policy, it is still a good idea to purchase an additional property insurance policy. This type of policy will protect your inventory, where as your homeowner's policy would not. In addition to protecting your current inventory, a property insurance policy can also provide coverage for any equipment you may use for your business. If this equipment is limited to single computer, a printer and a fax machine, you may not need to worry, if your homeowner's policy will cover these items. However, insuring against a loss of inventory should never be overlooked.

Liability Insurance

Even if you do not plan to have customers visit you at your location, if you make a product that is used by consumers, you may face heavy liability. For example, if someone was injured after using one of your products, would you be able to pay them should their claim be successful? It only takes one liability claim to ruin a business.

Other forms of liability insurance exist to help home business owners. For example, in addition to a general liability policy, there are specific policies such as medical payments, advertising injuries, extended personal injury and many others. If you have specific liability needs, it is important to discuss these with your representative to ensure that you are getting adequate coverage.

Business Income

If your new home based business has been started to replace your income from a previous job, or is your sole source of income, you will need to purchase a business income insurance policy. This policy will protect you against a loss of earnings should your business be unable to operate. This will usually work in conjunction with a property insurance policy to ensure that your downtime after damage occurs to your property will not result in the death of your company.

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