Protecting Your Home-Based Business With Insurance

By Rieva Lesonsky

While the debate on whether or not working from home should be allowed for employees still rages on (especially with Yahoo’s recent announcement retracting the long-standing perk), for some entrepreneurs, working from home is one of the reasons they started their own businesses in the first place. Whether your business is home-based temporarily or by design, you need to know that Homeowner’s Insurance policies do not generally cover home-based business losses.

The two most important coverage policies you need in order to run your business from home are Property and General Liability. “You need to insure your equipment because most homeowners’ policies don’t cover theft or damage of computers, printers, et cetera,” says Lisa Kanarek, an expert on home-based business and founder of WorkingNaked.com. Besides equipment, property insurance will also cover your business furniture, inventory and supplies. Premiums for property insurance vary depending on whether you want to replace the items or just get the cash value.

Another important policy to obtain is General Liability coverage “in case a client comes over and hurts himself on your property,” says Kanarek. General Liability coverage can also protect you if the client’s property somehow gets damaged on your property and they decide to sue you for the damage. When you’re running a business and watching every penny, it doesn’t make sense to put your business at risk by not having a good General Liability Insurance policy in place. If you have employees working out of your home, General Liability Insurance will cover them also. 

Other types of insurance to think about when you’re running a home-based business:

• Workers’ Compensation: Many states require Workers’ Compensation Insurance; in some cases, the clients you deal with may require you to carry it. If one of your employees gets injured on a client’s premises, the client will want to know you have insurance to cover the treatment.
• Errors and Omissions Insurance: If you need to protect yourself from lawsuits relating to the services you provide, this type of policy (also called Professional Liability Insurance) can protect you from if you are taken to court by a dissatisfied customer.
• Cyber Liability Insurance: If you run an IT business, you’ll want to purchase special Cyber Liability coverage to protect your business against liability and expenses arising from the theft or loss of data or from a breach of data security or client’s privacy. 
• Employment Practices Liability Insurance: Whether your employees work in your home or from their own homes, Employment Practices Liability Insurance (EPLI) protects you in case an employee tries to sue you for discrimination, harassment, or wrongful termination.

If you’re not sure what type of coverage you need, talk to an expert and ask about Business Owners’s Policies that bundle the most-needed business policies into one package at affordable prices. 

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Follow Rieva at Twitter.com/Rieva and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

Writtten by Brenna Lemieux - check her out at Google+ or Twitter