So, you have decided to get a side gig and start a home-based business. Or better yet, you have ditched the cubicle rat race to be your own boss. Either way, congratulations! But as you consider all the minutia on how to get started, how to gain clients and how to ensure a solid income, don’t forget about protecting yourself.
Your homeowner’s insurance policy probably isn’t enough—that protects your home, not your business.
Your business’s property needs protection too. Items such as technology, files, professional equipment, etc. should all be covered by some insurance. Additionally, you should consider the change of any legal claims in your new business and if you have the ability to cover those costs without insurance. A standard homeowner’s policy only covers about $2500 in business property. While this might be enough to get you a new computer, it is certainly not enough to fully protect your business.
Here are some questions to ask to help decide what essential coverage you might need:
Do customers or clients come to my home?
Do I keep inventory or supplies in my home or at off-site job locations?
Would I lose income if I had to close my business because of damage to my home?
Do I have employees working in or outside of my home?
Do I maintain client or employee records on my computer?
If you answered yes to any of these questions, you may want to review your type of coverage and coverage limits. Without the right coverage, your business could be responsible to pay out of pocket for property damage, lawsuits, employee injuries and issues related to data loss.
When it comes to coverage, you have 2 primary options:
Homeowner’s policy endorsement—by adding a rider to your existing policy, you can expand your property and liability coverage. This is an affordable option where you can expect no more than $100 extra per year, in general. But remember, this rider does not protect you if you also perform business activities at a site away from your home.
Business owner’s policy (BOP)—this type of policy combines property and general liability into a single solution and allows you to tailor to your needs. You should expect $500 and up per year for this type of coverage.
If you aren’t sure which option is best for you, consult your insurance agency for advice.
Insurance is one of those issues that takes up your time, but is a necessary part of managing your business for a profit. It is certainly worth the effort when you find yourself with a risk event that you haven’t covered. Spend some time pondering the consequences and then reach out to your local agent.
Here at California Southwestern Insurance Agency, we can help with all of your insurance needs. Call or visit us today.