If you have a home based business, there isn’t a need for insurance, is there? The answer is a resounding yes and if you have recently or not so recently opened the doors of a home based LLC or other type of company, you should immediately think about getting insurance coverage.
There’s the obvious and not so obvious sides to this story. The obvious insurance needs are health insurance, life insurance, and disability insurance especially if your business is the sole means of income for your family. Although these types of insurance seem obvious, many people forget to account for these expenses in their businesses and that can be a big mistake since health insurance alone could wipe out any profits earned at the beginning stages of your business.
Let’s look at the less obvious types of insurance. First, your home based LLC may be ran out of your home but that doesn’t mean that your homeowners insurance will cover you. In fact, standard home owners insurance coverage will generally not give you the protection you need. First, you may need business property insurance. This insurance picks up where your homeowners insurance runs out. It protects any equipment you use to run your business as well as your inventory from losses including weather or fire damage, theft, flooding, or other disasters.
The second type of insurance is general liability. Nearly all businesses, regardless of where or how they operate need general liability insurance. If you’re a mobile food service dealer you would need general liability coverage for obvious reasons but why a home based business? If you ever have clients come to your home for a meeting, product demonstration, or any other reason, you need coverage. What if they trip and hurt themselves while on your property? What if you have a hazard such as a spill and they slip? Although one would like to think that a person wouldn’t sue if they fell, it happens frequently.
Of course, the first thing to do is to check with your homeowners insurance carrier. Ask for a copy of the policy and read it closely to see what is covered. General liability policies aren’t expensive. Most policies can be purchased for about $500 annually, well worth the peace of mind.
If you’re forming an LLC and your business is home based, don’t forget to protect yourself. Even if you’re an LLC and you believe that your personal assets aren’t at risk, don’t forget that an attorney will still try to go after your personal assets. Make sure you’re protected.