7 Reasons Why You Need To Buy Insurance For Your Home Business


Do you run a small business at home? Perhaps you’re using your front yard space to operate a small cafe and bakery, you’re selling clothes and beauty products online, or you’re reselling state-of-the-art electronics from your garage.

Doing your business from your home hosts a multitude of benefits: less stress, no commute, flexible work hours, more time with your family, and the rewarding opportunity to be your own boss. But keep in mind that your home-based business is just like any other businesses – things can go wrong so it needs to be insured.

If you’re running a home-based business, here are 7 reasons why it’s necessary to get the right insurance.

1. Your business properties are valuable

Do you have homeowner’s insurance for your residential property? Imagine if a fire breaks out and your home office gets destroyed. While your existing homeowner’s policy can cover for home repair costs, your computers, printers, fax machines, copiers, furniture, cooking appliances, and other crucial equipment for your business won’t be covered.

  • What you need: Business Property Insurance

You might want to add a layer of protection for your business by purchasing business property insurance, especially if you use lots of high-value equipment. This policy ensures damage or loss to your crucial business properties and provides replacement cost coverage in cases of fire, natural disaster, or theft.

2. Your personal auto insurance won’t cover business-related damages

Do you use your personal vehicle for making deliveries, picking up packages, and visiting clients? If ever your vehicle gets into an accident during your day-to-day operations, your personal auto policy won’t be able to cover for any damages.

  • What you need: Commercial Auto Insurance

If you use your auto for business purposes, it’s necessary to insure it with commercial auto insurance which covers any damages to your vehicle and any liabilities to others.

3. You’re liable for any accidents on your premises

Imagine this scenario: It’s just another busy day in your small burger joint which is set up in your front yard. Suddenly, a customer slips and falls on your slippery front steps. As a business owner, who’s responsible for ensuring your business property is safe, you’ll face liabilities for third-party injuries.

  • What you need: General Liability Insurance

If you regularly receive people on site, from customers and clients to couriers, it’s a must to get liability insurance, which covers third-party injuries on your premises, damages to another party’s property, as well as lawsuits that may arise for them.

4. You’re manufacturing and/or supplying products

Do you supply, design, or manufacture a product? No matter how careful you are with regards to ensuring the quality and safety of your product, defects can be inevitable. For example, food products might be susceptible to contamination, homemade beauty soaps may irritate someone’s skin, and faulty electronics might induce fire.

  • What you need: Product Liability Coverage

You may consult with a business insurance broker about product liability coverage. Should a customer sustain bodily injuries or property damage from using your defective product, this insurance policy can protect you against claims or suits that may arise.

5. You’re providing services 

Let’s say you have a small beauty salon. After one treatment, your customer claims to have suffered hair and skin damages due to your negligence, and threatens to file a lawsuit against your business.

  • What you need: Professional Liability Insurance.  

This type of insurance policy helps protect individuals, providing professional advice and services, against negligence and malpractice claims made by a client. It will protect your personal assets, pay for your defense against such claims, and ensure the affected client is adequately compensated.

6. You’re being paid to provide professional advice

For example, you’re an accountant who works from home and you advise a client on a financial matter. But instead of resolving their issues, your client claims that your inadequate or incomplete advice caused them to lose more money. With this, they decided to file a lawsuit against you.

  • What you need: Errors and Omissions Insurance

Errors and omissions insurance is a professional liability insurance that safeguards you and your business against claims made for inadequate work, negligent actions, and inactions

7. Your business operations might be halted

Let’s say you depend on your home-based business’ profits to pay for fixed expenses, like utility bills, rent, children’s education, employees’ wages, and groceries. Now, what will happen if you’re forced to suspend your business activities due to fire, flood, and other natural disasters?

  • What you need: Business Interruption Insurance

This insurance policy will cover your lost revenue during a business disruption brought by fire and other disasters.

If you’re planning to insure your home-based business and want to know more about your coverages, you may seek help from a business insurance broker today.

Author Bio: Carmina Natividad is one of the daytime writers for Insurance Advisernet, one of the largest and most reliable general insurance businesses in Australia, providing high-quality risk management advice for business owners. She enjoys writing practical tips and tricks, making complex finance and business topics easier to digest.