Does Your Home-Based Business Need Insurance?
One often-overlooked necessity for home businesses is insurance. Here’s how to choose what’s right for your small or home business.
Bungee jumping operators, doctors and daycare providers know exactly what sort of liability coverage they need for their businesses. If you run a company where no one risks their lives in daring jumps, performs bloody operations or makes decisions like a four-year-old, your liability isn’t always so clear.
Regardless of the type of business you operate, you probably need some financial protection in place. However, if your risks are less than $10,000, Entrepreneur.com reports that you may be able to skip buying a policy. The following ideas can help you decide if business insurance is essential for your profession.
If you own a catering company, you probably know all too well how important it is to carry liability coverage. In the rare event that you accidentally give your guests a side of foodborne illness with their main course, you need a policy in place to protect you from lawsuits. Whether you are serving food, however, you are still likely to be held liable for a variety of surprising incidents.
A delivery man who is carrying a business package to your door step can easily sue you if he slips and falls on your sidewalk. The parents of a child who gets hurt in your home-based daycare also can bring a suit against you. In both cases, the liability is attributed to the business and, thus, you would not be covered by your homeowner’s or renter’s policy, according to Entrepreneur.com.
Protection from cases such as these comes in the form of business insurance. According to The Hartford, basic business insurance policies cover both your liability and business assets. If anyone breaks into your property to steal your office equipment, it will be protected by one of these plans. However, if you have intellectual property to protect, you may need to get an additional policy.
As your company grows and attracts new employees, your need for insurance will increase. It also may be necessary to add health insurance to attract and maintain new employees. And if you provide your employees with company cars, you will need vehicular insurance as well. Keep in mind that you need to protect yourself from liability issues that may arise among your employees, and ensure that you are financially protected in case of a workplace injury. According to the Workers’ Compensation Insurance Rating Bureau of California, the average cost of a worker’s comp claim is $65,000. That means a simple slip or trip by one of your employees could put your business completely under water.
The purpose of a business insurance policy is to safeguard your business from interruptions. When creating your business insurance policy, think about anything that could shut down your ability to earn cash, and make sure that it is covered. Everything from power outages to equipment breakdowns to data loss should be considered. In addition to replacing your assets and covering your liability costs, a good policy will cover your payroll, rent and other expenses until you can start earning revenue again, reports the Houston Chronicle.
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Most general liability business insurance providers offer checklists for business owners with recommendations for improving the safety of their business property.