According to small business finance specialist Fundera, there are now some 15 million home-based enterprises in the US, which account for almost 70% of start-ups and a staggering 50% of all businesses.
But while they are certainly striking, these figures shouldn’t be surprising.
In the digital age, there are many kinds of businesses that can operate and develop very profitably from within the home. And even for traditional business models, it will often make sense to avoid the substantial extra costs and risks of separate premises until an idea has proved its viability. But what about home-based business insurance?
Insurance: the One Business Expense You Shouldn’t Avoid
Running a business from home yields obvious savings in rent and utility bills, and may even provide a welcome tax break. But one key area in which expenses cannot be safely consolidated is insurance.
Contrary to the assumption of many home entrepreneurs, regular homeowners insurance seldom if ever covers losses arising from business activities. Worse still, carrying on a business not disclosed to the insurer may actually invalidate household insurance in respect of risks that would otherwise have been covered.
So if you’re running, or thinking of starting, any kind of home-based business, even if it’s just of the one person and a laptop kind, you need to consider carefully what your insurance needs might be.
Potential Losses for which You May Not Be Covered
Construction and the provision of services such as accountancy, consulting and marketing/PR are the most popular sectors in which home-based businesses operate.
But home entrepreneurs are now running a huge variety of concerns. And each of these may require insurance against some or all of the following risks:
Theft of or damage to a personal vehicle being used for business (e.g. deliveries);
Theft of or damage to any equipment being used in the business (e.g. computer equipment, tools);
Damage to or theft of business goods such as products for sale;
Theft of intellectual property;
Liability for data breaches and/or compromise of customers’ confidential data (e.g. card payment details);
Liability for health and safety of employees working in your home; and
Liability for financial loss or physical injury caused to a client or customer as a result of your advice or actions.
A Few Types of Insurance You May Need
Few businesses will need to insure against all these risks. But cash flow problems are the single biggest cause of small business failure and most will struggle to cope with all but the smallest uninsured losses. So it’s vital that you consider what your potential vulnerabilities may be, and take qualified professional advice on the coverage you need.
Depending on the size and nature of your operations you may, for example, want to consider on or more of the following –
Commercial auto insurance for vans, trucks, etc.;
Business property insurance for tools, stock, computer equipment, etc.;
Workers’ compensation if you have employees working in your home; and
Commercial and professional liability insurance to protect you against claims for personal injury or financial loss.
Talk to the Experts
At Brashears Insurance, we understand that with such a wide variety of businesses and potential risks to consider, there is no single “one size fits all” policy which will be suitable for every home enterprise.
And we know that it can be a challenge to put in place essential protections for your business without paying hefty premiums for coverages you will never need.
So we make it our mission to provide all our clients with a bespoke solution, precisely tailored to the needs of their individual business.
For an initial exploratory consultation on home-based business insurance, you can call us today on 805-564-7645 or Contact Us today.