Owning a business demands discipline, working long hours and taking on numerous responsibilities. This investment of your time and resources should have the right insurance coverage, even if you work from home. Many home-based business owners wrongfully assume that their home insurance covers their business activities in the home. In fact, running a home-based business, without notifying your insurance provider, may void your policy altogether.
Here are some other myths surrounding home-based businesses:
MYTH: My home insurance covers personal property (for example, computers and power tools) used for business purposes.
FACT: Your home insurance may provide limited coverage for losses or damage to business-related equipment, usually up to $2,000, and only while the equipment is in your home. This does not include inventory kept in your home or inventory, tools or equipment that are kept outside your home. Depending on the insurance provider, you may be able to extend your home insurance policy to cover your home-based business. If not, a specific business policy can cover work-related items.
MYTH: My car insurance covers business equipment that is kept in my car.
FACT: Unless you have coverage under a home business endorsement (add-on to an existing policy) or a specific commercial policy, any products, equipment or supplies that might be stolen or damaged while in your car will not be covered under your car or home insurance policy. Speak to your insurance provider about coverage for work-related items kept in your car.
MYTH: I don’t work from home often enough to need insurance. My insurance provider doesn’t need to know.
FACT: Regardless of the number of hours you work from home, you should take the right steps to determine what kind of coverage you need to protect your business. As a general rule of thumb, if you use your home address as your business address, you should inform your insurance provider. Think about what can go wrong, what you can do to prevent harm from happening and how you would pay for any loss or damages that may happen. More importantly, failure to provide full disclosure relating to insured risks may void your home insurance policy. For example, if your insurance provider is unaware of your home-based business, you may find yourself without coverage in the event of a claim.
MYTH: I don’t need liability coverage if I work from home.
FACT: Liability is perhaps, the greatest risk with a home business. What if a client falls while walking up the steps to your home? What if you are sued because of problems with a product or service you provided? Commercial liability insurance would cover most damages awarded against you and would pay the legal costs to defend you in a lawsuit. Personal liability insurance on your home insurance policy would not provide coverage in this case.
It’s important to consistently review your needs and re-evaluate your coverage to stay ahead of the curve.
Find the Plan to Cover Your Business
You should choose your insurance based upon the needs of your business. Your total risk depends on the number of liabilities you face. If your primary risks come from property damage, lawsuits, or bodily injury then a general liability insurance might be suitable for you. However, if you also need to protect workers, you need workers comp insurance as well. As your risk increases, we can find you a matching insurance plan. Call and speak with a Broker today about your unique needs – 905-574-7000