SMALL BUSINESS BASICS
Whether you’re running a part-time, seasonal or full-time business
from your home, you’ll want to carefully consider your risks and
insurance needs. Starting a business—even at home—can be a challenging
venture, and having the right insurance can provide a financial safety
net and peace of mind.
Your insurance choices should, in part, be based on the type of
business you operate. For instance, if you’re a sole practitioner
home-based accountant,
you’ll have very different insurance needs than your neighbor who runs a childcare business. When considering insurance for your business, here are some questions to ask yourself:
you’ll have very different insurance needs than your neighbor who runs a childcare business. When considering insurance for your business, here are some questions to ask yourself:
- What type of business do I run? What are the potential risks faced by your type of business?
- What is the value of my business property? Do you have expensive equipment, such as cameras or commercial printers? Do you stock valuable business inventory, such as gemstones?
- Does my business have employees?
- Do customers or contractors visit my business at my home?
- Do I use my car or other vehicles in the course of my business operations?
- Does my business store customers’ financial and personal information on a computer or through a cloud computing service?
The answers to these questions will guide which types of insurance to
purchase—and how much coverage you’ll need. For your home-based
business, the main types of insurance to consider include the following:
Property and Liability Insurance
Depending on the nature of your home-based business, you’ll need
insurance to protect the value of your business property from loss due
to theft, fire or other insured perils. You’ll also need liability
protection to cover costs if someone is injured as a result of visiting
your business or using your product or service. Your homeowners
insurance may provide some protection for your business, but it may not
be sufficient. Options for property and liability insurance for
home-based businesses include:
- Adding an “endorsement” to your homeowners policy
- Stand-alone home-based business insurance policies
- A Business Owners Policy—or BOP—which combines several types of coverage
Business Vehicle Insurance
Your personal auto insurance may provide coverage for limited
business use of your car. But if your business owns vehicles or your
personal vehicle is primarily used for business purposes, you’ll need
business vehicle insurance.
Workers Compensation Insurance
If you have employees, you’ll want to strongly consider purchasing
workers compensation insurance to cover costs if an employee is hurt on
the job. Workers compensation insurance provides wage replacement and
medical benefits to employees injured in the course of employment, in
exchange for relinquishing the right to sue the employer. In some
states, workers compensation insurance is mandatory, so be sure to check
your state’s workers compensation website for local requirements.
Other types of insurance may be suitable for your home-based business
as well. Your insurance professional can help you evaluate your needs
and select insurance to meet your budget
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