Many entrepreneurs start their business at home. That way, they can cut costs on having to rent out office space and they can be more flexible by working from the comfort of their home. However, a home business is still a business and you must treat it as such in order to succeed. What’s more, many home business owners believe they cut even more costs by avoiding or neglecting business permits, licenses and insurances.
For instance, insurance is the first thing to get neglected. After all, you have home insurance and that should be sufficient, right? Very wrong! As a matter of fact, home insurance differs from business insurance and if you run a business at home, it can even render your home insurance invalid. Therefore, if you want to run a business from home, make sure you obtain proper insurance for it. Depending on the nature of your business, you may need several insurances. Here are a few insurances your home business might need.
Business property insurance
One thing that home business owners tend to forget is that your home insurance won’t cover any costs for stolen, broken or damaged business property you use in your home business. After all, that property is classified as business property and it requires a specific insurance. That is especially true if you don’t keep the stuff your work on, such as a laptop or a smartphone in your home all the time.
Business property insurance will cover any losses for your business inventory, if it’s not on your home premises, while homeowner’s policy will cover your inventory while it’s at your home. When looking for specific premiums for business property insurance, make sure you evaluate all the things you have that you use for your business operations. That way, you’ll know which premiums to opt for, so that any costs for business property can be adequately covered.
Many home businesses have a vehicle involved in their everyday operations. Some use it to transport products or goods, while others simply classify their car as business transportation means. Either way, if you’re using a car, you have to properly insure it.
That way, if you’re involved in an accident, you’ll be able to cover any repair costs or injury costs and medical bills for yourself or others that were involved in an accident. Many insurance companies offer full premiums for vehicles, covering most common risks that are involved. However, if you need to tailor your coverage according to specific needs, you can look for companies such as Youi NZ that can offer more flexible premiums.
Business liability insurance
Business liability insurance, also known as Commercial General Business Liability, is an insurance policy every business needs, even the ones that operate from the owner’s home. The main reason is that this insurance policy protects both the owner and the business from claims made against them. Legal fees for fighting cases in court can cost millions, which is something a home business owner simply cannot afford.
Claims made against t your business such as, angry customers suing you for poor product or service quality, copyright infringement claims, personal injuries on your property and so on can be covered with business liability insurance. Again, look for a premium that involves coverage best suited for your business. Such premiums cost you anywhere between $700 and $2000 annually, but they help you avoid a financial crisis when liability claims are made against you.
Errors and Omissions insurance
Errors and Omissions insurance, otherwise known as professional liability or malpractice insurance is an insurance policy that protects you from claims that you didn’t provide the necessary level of professional service. If you claim to be a specific industry professional, such as lawyer, architect, computer technician or a physician that offers valuable advice to clients, it’s expected of you to deliver a certain quality of service.
Moreover, it’s expected that you have specific knowledge and experience in the field of services you provide. If not, clients can make a claim against you for negligence. It’s important to understand that Errors and Omissions isn’t included in the business liability insurance. Instead, you have to obtain this insurance separately, if you offer similar services from your home. It’s also important to understand that there are various Errors and Omissions insurances that offer different coverage, depending on the nature of the services you provide, so make sure you get the right one for your home business.
Business interruption insurance
This insurance policy is also called business income coverage. What it does is cover the losses in case your business operations are slowed down or ceased entirely. In other words, it helps you recover lost revenue or profits because your business couldn’t operate properly for some reason. Those reasons are usually natural disasters, such as floods, fires, earthquakes and others.
This insurance is good to have for your home business, especially if your home is in the area that’s at risk of such disasters. Moreover, this insurance works, even if the property isn’t yours. For example, you’re renting the home you live in and you’re running a business from there. You never know if something bad is about to happen, so it’s best that you’re prepared just in case.
Running a business from home doesn’t mean you can neglect important factors, such as insurance. A home business is still a business and you must ensure it remains operational. Having insurance won’t take much out of your budget, but it will mean a lot for your business, should something bad happen.