If you own a
home-based business, then you’re among more than 50% of small businesses backing up the U.S. economy. As with any other type of business, your company faces certain risks that require insurance protection. Unfortunately, your home insurance policy doesn’t cover most business-related risks. Keep reading to learn more about the importance of purchasing commercial insurance policies for your home-based office.
General Liability Protection for Your Small Business
Running a home-based business without appropriate commercial insurance coverage is very risky. Your homeowners policy (or even renters insurance) will cover hazards like fire, storm, or wind damage. However, it doesn’t include common liabilities that small businesses may encounter from time to time. Also, operating a business at your home without notifying your home insurance company may nullify certain coverage benefits.
To be on the safe side, obtain the following commercial insurance policies for your home-based company:
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Professional liability insurance:
This policy can cover claims of negligence, misconduct, substandard work, or failure to meet contractual obligations as a service provider or contractor. You should carry this policy if your home-based company offers consultation services for a fee. Also called errors & omission insurance, it may cover legal defense fees if one of your clients sues you in court for financial loss due to negligence on your part.
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Cyber liability insurance:
Storing, handling, and processing electronic customer data comes with the obligation to protect personally identifiable or sensitive information. While you may face costly data breach claims if such data is stolen or exposed, you can protect yourself with cyber liability insurance. According to a 2020 report, 43% of small businesses have experienced cyberattacks. Worse still, 60% of small companies that are attacked by cybercriminals collapse within six months. These statistics demonstrate the importance of being sufficiently covered against cyber liability.
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Commercial general liability insurance (CGL):
This coverage is usually a basic requirement for all types of business. You should have it if your clients or customers visit your home office from time to time. Your homeowners policy won’t pay for slip and fall injuries involving your clients, customers, suppliers, or business partners on your property. CGL insurance covers medical costs and settlements for such third-party injuries and legal expenses if you’re sued.
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Product liability insurance:
If you manufacture, repair, or modify products for sale, consider getting this coverage. It can pay for property damage or bodily injury claims linked to the use of the products you supply or make. Moreover, your product’s manufacture or design defects that cause harm to the end-user are usually covered by this policy.
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Commercial property insurance:
While liability policies pay for damages or losses incurred by third parties, property insurance pays you for such losses. It can protect you from financial loss if business equipment stored in your home office is stolen or damaged in a storm, fire, or any other covered event. Laptops, office furniture, your physical workspace, and inventory are key items covered by this policy. With this insurance, you can avoid going out of business after a covered event has occurred.
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Equipment breakdown insurance:
Get this coverage for your mission-critical machinery. Industrial-grade equipment, computers, or any other assets that are critical to business continuity should be included in this coverage. When your machines fail or break down, this policy can pay to repair or replace them.
Having these liability and property coverages for your business can protect you from various potentially devastating financial losses. If you need help securing your home-based company with proper commercial insurance policies, contact us at
Reata Insurance Group today. We can help customize your coverage based on your unique needs and budget.
