Home-based Businesses And Commercial Insurance

Many people are starting up home-based businesses. And many of these same people assume that since they are running a business out of their house, they don't need to buy business insurance.

As they are under the impression that their home owner's policy will cover their home-based business protection needs. If you start up a home-based business, you cannot rely upon your home owner's policy for protection. You must have additional commercial insurance to protect the business.

For one thing, your home owner's policy will not cover any of your business assets such as computers, desks, fax machines, or anything else that you will be using for business purposes from out of your house. That policy was never designed to cover those needs. It protects you only in the event that something bad happens to your personal property contained in your home or to your home itself. Any business related misfortunes will not be covered by that policy. Commercial insurance is what will protect your business assets.

For another thing, running a business out of your house may actually get your home owner's insurance policy cancelled. If you don't inform your insurance carrier that you are starting up the business from your house, and they find out, they will likely cancel your policy so that you cannot make false claims against them.

Imagine, for instance, that you have prospects and clients visit you in your home-based office, and one day one of them trips and falls over a cord and becomes injured and, they decide to sue you for medical bills and personal injury compensation. Your home owner's policy provider would not be too thrilled to learn of this, and they definitely would not pay the claim.

So if they were to learn that you were starting up your business from your house without telling them about it, they would seek to prevent such a scenario from ever taking place by cancelling your cover, avoiding any potential lawsuits and their legal expenses.

Even if you are using mostly personal items to run the business and the home owner's insurer would cover the expenses of their loss, home owner's policies don't have high ceilings on claims payments perhaps a couple thousand pounds and that's it. What if you were to lose the items necessary to your business such as your computers? Would you be paid enough from the home owner's policy to be able to immediately replace them? Probably not.

One type of business insurance that you might need to cover your home-based business risks is business insurance. This is a commercial policy that will cover you specifically if you lose the physical items that you need for running your business.

Such a policy would be tailored to pay you if you lost your computers to fire, burglary, etc. This policy would also cover fax machines, your business telephone system, supplies of items that you sell or provide that get stolen or damaged.

And what about our above imagined scenario of the visiting prospect who trips and falls and gets injured in your home office? For protection against that lawsuit, you need to also have liability insurance.

Running a home-based business requires commercial insurance protection. Never let yourself be without it and never fall into the trap of thinking your standard home insurance will be sufficient.