Many home-based business owners treat their operations informally—but you shouldn’t. According to Census Bureau data, about half of U.S. businesses are operated from home. The Insurance Information Institute has found that the majority of home-based business owners lack insurance coverage beyond what they have through their homeowners’ insurance policy—which is generally not designed to cover business-related claims.
Protect your business finances against these risks and others by obtaining or updating your business insurance coverage:
- Lawsuits. If a customer, vendor or employee trips on your home’s front steps, you can be sued. If someone accuses you of selling a defective or unsafe product, breach of contract or making false claims, you can be sued. Consider the potential liability risks that come with running your business from home and take steps to reduce them. Personal insurance policies typically won’t cover business-related claims, so it’s important to have coverage that will.
- Property damage. A fire, severe storm, flood or other natural disaster that harms your home can also damage or destroy your business property. Make a list of all your business’s assets—including inventory, equipment, computers, and paper and digital files—and aim to protect those assets. Consider keeping important documents in a fireproof box and store inventory in a locked storage unit either inside or outside the home. Try not to store business-related items in places that may be prone to flooding, such as your basement.
- Business interruption. Just as a business based outside the home can be forced to close due to a natural disaster, so can a home-based business. You may have to suspend operations for several days as you deal with the cleanup and recovery efforts. Create a business and disaster recovery plan that lays out how you will resume operations in case of a major interruption. Consider getting business income coverage that can help replace lost income and cover key expenses you incur to keep your business afloat.
- Injuries and illnesses. If you’re a solo entrepreneur (a solopreneur), your financial livelihood depends solely on your ability to work—and you can’t take that for granted. If you get ill or injured, you will need to figure out how to recoup that income. Disability coverage can help protect you. If you have employees, they could suffer work-related injuries. Most states require businesses to have workers’ compensation coverage that is “no fault”—meaning a business owner generally cannot be sued in the event of an on-the-job injury or illness.
- Data breaches. You are probably storing sensitive or valuable information on your business computers, smartphones and other devices. If that information gets stolen by a hacker, your clients could lose faith in your business or worse, sue. Don’t skimp on data security measures. Make sure to activate firewalls on all computers, put strong password protections in place on all accounts and devices, and install up-to-date antivirus software. Data breach insurance can protect a business from the costs of civil litigation and other penalties that may arise in case a breach still occurs.
There can be many benefits to running your business from home, but the risks shouldn’t be taken lightly. Be Sure you are covered properly.
Source: The Hartford – Home-Based Business Owner? Watch Out for These 5 Big Risks