Do You Need Insurance For Your Home-Based Business?

Rocketlawyer.comSo you run a home-based business, you have your home-office set up in the spare room, and you have closet turned into a storage for the inventory you need. You think that you are covered by your home insurance policy and any potential damage, losses, liabilities or risks associated with your business s already covered. Righ? Wrong.

The only case the scenario mentioned above will work is when you disclose that you are operating a business out of the house and declare your home office under your home insurance policy. In case you did not do that, your business assets are not covered, and the insurance company may deem your home insurance policy void.

You may think that your business is small in size and has limited potential risks. However, no matter how small your business is you need to purchase a separate insurance policy that specifically covers your business.

It is advisable to speak to an insurance broker, who can guide you and advise on either getting a separate policy or based on the business category, you can extend the coverage of your home insurance policy to your business as well. In general, you might need one of three types of business insurance policy/ coverage:

Property Insurance

This coverage protects essential business assets of high value. This includes (but not limited to) laptops, machines, and business inventory.

In case of theft and the loss of such items from your house, or in case of damage due to fire, water or any hazard, you can claim the damaged/lost items under your business property insurance policy. Consider to include policy extension if you use these things outside of your home office such as client’s site.

Business Liability

In case of third party damages or injuries, this coverage will protect you and your business. If a client or any third party experience any damage or injury in operation related to your business or within your premises and initiate a lawsuit against your business, you will be covered by your business liability insurance.

Errors & Omissions

This insurance coverage is specifically for those businesses that require completing legal forms such as real estate agents; or professionals and service providers such as consultants, accountants and advisors. In case you make a mistake, either an error or an omission of information; or in case the client claims financial losses based on the service you provided or the advice you gave them; you might face a lawsuit. In these cases, your insurance coverage for errors and omissions will protect you and your business.


Originally posted 2018-01-24 19:26:57.

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