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Home Based Business Insurance

According to the Census Bureau there were over 27 million home based businesses as of 2007.  And, it’s estimated that more than half of all small businesses in the U.S. are home based businesses.  This has certainly risen since the down turn in the economy when many people were downsized from their employment.  This shift has given way to the small, home based business of today and tomorrow. 

I operate my Independent Insurance Agency from my home.  The benefits are tremendous and technology allows more efficiency and productivity.  I’m able to spend more quality time with my family instead of dead time on a commute to an office.  I’m able to react to customer requests more quickly.  And, I found out that I’m not alone.  I meet so many people who operate small businesses from their home, it’s fantastic. 

Unfortunately, many of these businesses have a problem.  I find many of these at-home small businesses don’t have proper home based business insurance.  They falsely believe their home insurance will cover them if something happens.  Here are three common reasons I hear why entrepreneurs don’t have business insurance.  These are also the three reason’s you need a home based business insurance policy. 

1.       My Home Insurance Policy will cover me.  I own a home; my home insurance company is going to cover me, right?   Wrong.  Most home insurance policies have a minimal amount of coverage for Business Property.  So, if you have product, equipment, or supplies related to your business, at your home, there will be little or no coverage and, if the product, equipment, or supplies are away from your home then you’ll have even less coverage.  Generally, you can increase this coverage through a special endorsement but most insurance companies won’t go higher than $10,000. 

The largest risk a business owner faces today is Liability.  Lawsuits abound.  It’s estimated that a lawsuit is filed every 2 seconds in the U.S.  Now that you know this, know there is virtually no coverage for Business Liability under your home hazard insurance policy.  Imagine a product you produce injures someone after purchase.  Your home policy will not cover this type of liability claim.  Or, say the UPS driver is delivering a shipment of supplies and material and is injured on your property due to a hazard.  Will you have coverage for this loss?  No.  Are you a Realtor?  You may have limited coverage if you’re out showing homes and your buyer is injured or you cause property damage.  We live in a risk filled world, with people who are more inclined to sue than not.  It’s in your best interest to protect yourself and your livelihood by having the right home based business insurance.

2.       I’ve had my business at home for a long time and nothing has happened so I don’t think I need it.   A common excuse I hear from many home based business owners is they don’t believe they face any risk.  I once went to the home business of a seamstress.  She had a room where she did alterations for her clients and she had cats.  One of the cats was wearing a diaper because it was marking its territory in the house.  What if the cats damaged a wedding dress or a stack of high end jeans waiting to be altered?  Just because nothing has happened before doesn’t mean something won’t happen in the future.  Give your clients assurance and confidence that you are a legitimate business by having the proper insurance. 

3.       Business insurance is expensive and I don’t think I can afford it.  This just isn’t true.  Most home based businesses just need a basic home based business insurance policy.  These can run as little as $159 annually depending on the type of business and the amount of coverage you need.  Consider this; you might also be losing business because you don’t have business insurance.  Potential customers may not use your business because you don’t have insurance.  Also, to bid on contracts you usually need to show a Certificate of Insurance proving a minimum level of coverage.  Having the right business policy can put significant dollars in your pocket, many times more than the cost of the policy. 

There you have it.  Three reasons why you need business insurance for your home based business.  If you’re in Arizona feel free to call my office to ask any questions.  If you’re in any other state, call an Independent Agent in your area for the right advice for your particular situation. 

Author: Richard Morris

Richard Morris, an independent insurance agent in Chandler, Arizona, has been serving and helping Arizona families with all their insurance needs for over 23 years. Visit his website at to see all the ways he can help you with your insurance needs or call the office at (480) 336-2707 or toll free at (888) 907-9349. Connect with Rich on Google+ and Twitter.
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mackenzie said...
I was thinking about starting a home based business. I always thought my home owners insurance would cover it. I didnt know I would still have to get a business insurance. Thanks for sharing.
FRIDAY, JULY 06 2012 7:56 AM

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