Things to Consider When Starting a Home Based Business

Starting a home based business might sound appealing (working in your PJ’s, setting your own hours, no boss!!). However, you need to make sure that your business is properly insured. Here are some questions to ask yourself about your endeavor.

• Will merchandise be stored in your home?
• Will you have office equipment?
• Will there be customers on your property? What if a customer slipped on a wet floor or an icy sidewalk?
• Are you selling a product? What if a customer is injured by your product?
• Are you providing a service? What if a customer is not happy with your work? A mistake is made? Or you missed a deadline?

If you can answer yes to any of these questions, then you may need a Business Insurance Policy. There are a few types of policies available:

1. Your Homeowners Policy. The typical homeowners policy doesn’t provide coverage for a customer who’s injured on your property and may only provide limited coverage up to a special limit of liability for damage to merchandise or office equipment that’s associated with your business. For smaller home based businesses, you may be able to add an endorsement to your current policy to provide coverage. Depending on the scope of your business, you may need a separate policy altogether to provide adequate coverage.
2. A Home Business Policy. This type of policy is for medium-sized businesses ($2,500-$10,000 in assets). It will provide both property and liability coverages. What does liability coverage do? It could provide coverage if a customer is injured by a product or slips and falls on your front porch. Liability coverage could also provide a defense if a customer sues you for missing a deadline.
3. A Commercial Insurance Policy. This type of policy is for larger home based businesses that have a lot of merchandise and/or equipment and have the need for more and different types of liability coverage.

If you are thinking of starting a home based business, speak to your local independent agent. They will be able to help you decide on the policy that is just right for your new business.