With more people choosing to work or run their businesses from home, it's easy to get confused about the kind of insurance to choose. Do you retain your homeowner's insurance, or do you need to upgrade?
To figure this out, you need to comprehend the risks associated with running your business from home. Here are some dangers that you're exposed to when working from home.
If you run your business from home, you'll often store your inventory at home. Anything can happen to your inventory, especially if you don't have the same security measures as a typical business needs.
Your kids may accidentally damage your inventory. Similarly, fire or theft can wipe out your entire inventory. Will your homeowner's insurance cover the damages and losses? Typically, homeowner's insurance will not cover such losses, and when it does, it offers very limited coverage.
The gap between home-run businesses and physical offices is large, especially when considering cybersecurity measures. Many homeowners who run their businesses from home often have relaxed cybersecurity measures.
If you intend to work or run your business from home, consider improving your cybersecurity measures. Cybercriminals often view home-run businesses as easy targets. If they manage to breach your security, they can steal data or other important information that may affect your business. Most homeowner's insurance policies don't cover data-related losses.
Since you run your business from home, you'll often meet clients at your home. What happens if one of your clients is injured while on your property? Does your homeowner's insurance policy cover the clients?
Typically, if someone is injured on your property, your homeowner's insurance will kick in to cover the injuries and medical bills. If the injured person files a personal injury lawsuit, your homeowner's insurance policy should still offer adequate protection. However, since the injury is work-related, your homeowner's insurance policy might not offer needed coverage. For such situations, a business policy would offer better coverage.
What happens to your business equipment if they're damaged? Your homeowner's insurance should cover the damage, but there are several caveats. Your insurance will have limits on the coverage. For example, if you use your oven for baking cakes or cookies for sale, your insurance agent might classify your oven as business equipment. This means that your homeowner's insurance doesn't cover it. For that, you'd need business insurance.
To avoid any confusion or disappointments, consult your insurance agent and discuss these issues at length.