Home business insurance is an important protective measure that too many home business owners overlook. Many new business owners are so focused on getting their home-based business up and running that they tend to forget about possible problems that can not only destroy their business, but also be a disaster on their personal lives as well. Considering the many things that can go wrong on a daily basis, insurance is one of the main things that all businesses should consider before they open their doors.
Many owners realize the importance of liability insurance, especially if they invite customers to their place of business, but many forget about some types of insurance that can help them through major problems. Different policies are available for different types of protection including:
- Business interruption insurance
- Health insurance
- Home insurance
- Liability insurance
Open for business means open for liability
Many homeowners’ policies do not cover part of the home when it is used for business purposes. In order to be covered you will likely need a separate policy for the business. If a customer is injured while on your property it will probably cost more than if a friend coming over for a visit trips on the front sidewalk.
In addition, if you sell products or services that could cause injury to someone else, you could also be hit with a product liability claim, even if you don’t make the product. The re-seller of a product is often included in any legal action if a product causes physical harm through injury or damage and without insurance, any award will have to come out of your pocket or future earnings.
Business can be interrupted for a variety of reasons and when the business is unable to open, you will not make any money, causing a burden on your personal finances as well as the business cash flow. Think about the many things that could close your business through no fault of your own:
- Major power outage lasting several days
- Storm damage to your home
- Natural disasters such as hurricanes or a tornado
Many home insurance policies will cover any damages to the structure and in most instances the content of the home. However, homeowners’ policies will rarely offer income protection if you are unable to conduct your business due to circumstances beyond your control.
Protecting your own health is up to you
It is important to remember, when opening your home business that you no longer have an employer that might provide health coverage. You will need to have your own health insurance in addition to all of the other policies that you need to cover your business and any employees you might need to hire. If you have an insurance company with which you have worked in the past, it is possible that by having all of the policies through one company, a discount can be found to make it more affordable.
Too many businesses are started with just enough money to get them off the ground, counting on operations to produce an income to sustain then financially through the initial growth. If you become ill, your business will suffer and the money you will have to spend could spell disaster for the business and your personal finances. Consider:
- Your family’s medical needs
- Your own medical needs
- How ability to work affects your business
- Who is there if you are sick at home?
It is no secret that the cost of medical care is high and becoming more expensive every year. When most new business owner’s are strapped for cash to begin with, the money spent on health insurance could be considered an investment instead of an expense, since it could cover the cost of getting better instead of pulling cash from the business to pay the medical bills.
Useful Resources
- Home Business Basics provides a brief discussion on business insurance needs.
- Insurance information institute offers insights on how insurance can protect even the smallest businesses.
- Insurance counselor covers some of the differences in home and business insurance.
