Many start-up businesses launch at home. The amount of insurance coverage that you need for your business is based on several factors, such as:
- What type of business are you in?
- How much business equipment or inventory do you have at your home office?
- Do customers visit your home?
- Does your business require you to visit other people’s homes?
- How many employees do you have?
- Do you store customer or employee personal information—Social Security numbers, credit card or other account data?
A good, customized business policy can help protect you and your endeavor as much as possible. If you have homeowners or renters insurance, you might think you’re covered. However, most homeowners and renters policies only go so far and aren’t designed to cover things like destroyed business inventory or customer injuries.
For example, a wedding photographer may have cameras and equipment that are worth several thousand dollars. If something unexpected happens, homeowners coverage would be limited to $500 to $1,000 for equipment used exclusively for a business. The entrepreneur would definitely want coverage that is available through a business policy.
Homeowners insurance will also not cover your home-based business against liability claims. Here’s why that’s a concern.
Suppose your office is in your basement, and a customer trips, falls and gets hurt. That customer might sue you. If he or she does, you’ll want premises liability coverage since your homeowners policy won’t cover a premises liability claim filed by a business client.
Home-based business owners also are often liable for injuries their clients or their clients’ property sustains away from their home. For example, a real estate agent could be liable for injuries a potential buyer sustains during a home showing. In this scenario, you’ll need business coverage.
Shopping for business insurance
Here are a few more types of coverage and reasons why you’ll want to consider a business insurance:
- Professional liability – Businesses that offer professional services or advice should consider purchasing professional liability coverage. Professional liability could provide coverage for negligence claims as well as defense costs of lawsuits.
- Business income and extra expenses – This coverage could help cover lost income if your business closes due to a fire or loss that your policy covers. Extra expenses may be available if you need to rent equipment or space temporarily due to a covered loss.
- Data breach - You could purchase this coverage to provide your business with crisis resolution services after a data breach.
- Product liability coverage – It can help pay for damages and legal defense fees if a customer names you in a lawsuit after being injured by a product you produced.
- Electronic data coverage – It can help you recover from a loss due to a computer virus that corrupts your computer system.
Talk to a professional
Get in touch with a licensed insurance professional or a local ERIE agent who is familiar with your business and can help you decide how much coverage you need for your business. When purchasing insurance, the price is one consideration, but you’ll also want to pick a reputable insurer that is in good financial condition and is known for providing quality customer service.