When you are ready to open your home-based business, you have lots of things to consider: making sure that your website and social media accounts are in order and ready to attract more customers, arranging your home office in a neat and tidy manner and removing distractions from it, and testing your products to make sure that they work properly. There are also taxation issues to take into consideration, and a careful planning of your finances to keep your family covered until your business starts bringing in enough money.
With so many issues to take care of, most of the time one critical issue is forgotten: insurance. As a home business owner, this is something you cannot afford to leave out. Failure to conclude the most important types of insurance policies for your home business leaves you exposed to the risk of losses you cannot recoup, or even lawsuits. Remember that even though you are operating from home, you are running a business and thus you are exposed to every kind of risk like any other business owner operating from a shop.
So, today we will discuss the most important types of insurances which you should hold as a home business owner:
1. Business Property Insurance
Your regular home insurance does not cover your stocks and inventories, equipment and electronics which are used specifically for your work. Thus, if you have bought a computer, printer, office supplies and raw materials to craft your products and the purchase invoice is issued to your business entity, not yourself as a person, then your insurance policy will not pay for them if they are damaged beyond repair or lost in a theft, flood or fire.
Business property insurance is the only type of insurance to cover for these items. In order to obtain a more affordable monthly premium, you should discuss with your current insurer and find a great solution which offers you optimal coverage.
2. Business Interruption Insurance
If a natural disaster, such as an earthquake, a flood or a severe snowstorm paralyzes your entire community, it is most likely that you are unable to operate your business. Electricity, internet and phone lines will be down and you will probably be quite busy salvaging as much of your property as possible. During this period when your business cannot operate, you are not making any money for your family. A business interruption insurance will make sure that you receive some compensation to help you get over this difficult period, pay your bills and support your family.
3. General Liability Insurance
If in the course of your business operations you invite customers or suppliers in your home office for meetings, to pick up products or deliver supplies, you must hold a general liability insurance. If any person suffers an injury of any kind on your property, they can (and most certainly will) sue you to pay for their hospital bills and lost income. The general liability insurance takes care of these situations, by paying up the requested claims and also covering your legal fees if the case is taken to court after all.
Remember that this is a critical type of insurance to hold – the fact that you are working from your home does not void your liability as a business owner in such situations.
4. Disability Insurance
It is not something anyone would like to envision – but you may suffer a serious accident which could leave you disabled and incapable of working to support your family, even in your small home-based business. In such a situation, you need to protect both yourself and your family from the sudden loss of income. Disability insurance will make sure that you receive compensation for your lost ability to work.
5. Workers’ Compensation Insurance
If your home-based business is more successful than you expected and you need to hire people to help you manage a growing client base, you need to take a workers’ compensation insurance. Again, while your employees work for you, it does not matter that the activity takes place in your home. If they trip and fall or if their chair breaks and they are injured, they will sue for hospital bills payment and other compensations.
In case you are getting worried about the extra expenses you will incur after taking all these insurances, remember that they are all for business purposes and thus they are deductible on your tax return. And one more thing: better be safe than sorry!