Insurance and the Homebased business

If you’re starting a homebased business, don’t assume your homeowners (or renters) coverage is sufficient to cover any mishaps. Insuring your homebased business is crucial to protecting both your business, your home and any other assets you might have.

A homebased business needs all the same insurance as a retail space, a commercial office, a warehouse or any place of business. While most homeowners policies cover a limited amount of business equipment, it very well could be that what you have is worth more than your policy’s limits.

So what kind of coverage do you need? Cover the following:

• Equipment: This includes everything you use to operate your business (computers, copiers, printers, telephones, etc.) plus any other equipment (woodworking, catering, general hand tools) used to provide products and services.
• Inventory: This includes the products you sell and, if you do any of the “manufacturing”—assembly, sewing, cooking, etc, the materials used to make them.
• Liability: Base your liability coverage on potential risks. Do you need professional liability; errors and omissions coverage; liquor liability (for party planners, caterers, etc.); off-premises liability (for working at another location); or, if you produce a valuable item, product/completed operations coverage (for your product/work after it’s done)?
• Vehicles: Any vehicle used for business must be insured, even if it’s personally owned. If you take possession of your customers’ property for any reason, it, too, should be insured while in your custody.
• Workers’ compensation: If you have employees, you need the appropriate coverage as required by your state—and proof thereof.
• Fidelity bond: If you (or your employees) perform work in customers’ homes, a third-party fidelity bond will pay for losses due to fraudulent acts such as theft. (Particularly useful for contractors, party planners, caterers, etc.)

Be sure you choose an agent who understands your type of business and has access to a variety of homebased-business insurance products. Make this process a startup priority. If your carrier doesn’t know you have a homebased business, in the event of a claim, there’s a good chance your homeowners policy could be canceled.

Ask questions of your agent. If the answers are not satisfactory, choose another agent and even another, if necessary, to get the coverage you need. Someone can help you.

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About Maesz

Glenna Mae Hendricks. She is an entrepreneur and income tax consultant, so we get lots of good tax tips from her. She is an oenophile (“look that up in your Funk and Wagnall’s,” she says), and a wine enjoyment teacher/guide who also writes wine notes at the Allen’s Retail Liquors site. Her political thoughts (and occasional outbursts of domesticity) appear at Old Feminist and Wild-eyed Liberal.

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