After countless hours of hard work and preparation, the time has finally come for you to open your home-based business. There is just one last thing to consider before you do: insurance. If you come from a traditional working background in an office, this is an entirely new arena for you. That’s why it is so important to understand some of the myths and misconceptions that abound when it comes to protecting yourself and your business. Read on to learn about the top four.
MYTH 1: My Business is Too Small to Need Insurance.
You might be under the impression that you are immune from lawsuits because of the diminutive stature of your business. It’s tempting to fall into the trap of minimizing the importance of the projects you intend to work on and the clients who will be paying you, but this is a big mistake. Even if your client is the guy next door and your kids play soccer with his, you are now in a business relationship with him. Furthermore, his project is very important to him, so much so that he is willing to pay you to handle it. As soon as money changes hands, there is the potential for oversights and mistakes no matter how amazing you are. That is why it is vital that you protect yourself by ensuring that your business, regardless of how tiny, is adequately insured.
MYTH 2: I Don’t Need to Worry Because Clients and Employees Don’t Come to My House.
Even if you never receive visits from customers and you have no employees working for you, that doesn’t mean you should not still have proper coverage against slips and falls and other liabilities. After all, there will come a time when a work-related package is delivered to your home. How ironic and tragic would it be if the delivery person took a tumble on your steps and sued you? Furthermore, insurance for a home business doesn’t just focus on injuries; it also covers you if you have given bad advice when consulting a client or forgotten to provide your client with an important piece of information that ends up costing him or her money. There is no way around it: You need an errors and omissions policy.
MYTH 3: Insurance for a Home Business Costs Too Much.
As a small business owner, chances are good that you will be making minimal profits, particularly at first. For that reason, you might be tempted to forego insurance because you believe it will break the bank. In reality, that isn’t the case. First of all, you can speak to your homeowners insurance agent to see if he or she can offer you riders or additional policies at a reduced cost since you are already a customer. In addition, an independent agent can often furnish you with a basic policy that costs between $25 and $50 a year and covers approximately $2,500 worth of office equipment as well as slip-and-fall insurance. Note, however, that professional liability is not included, and you will also need this coverage if you are working for yourself.
MYTH 4: I Already Have Homeowner’s Insurance. That Will Cover Me Adequately.
This is one of the most frequent misconceptions that young entrepreneurs have. In reality, your standard homeowner’s policy is not designed to cover business-related risks such as professional liability or work-related slip-and-falls. You will also most likely not be covered for theft, business vehicle usage or disability.
Since more than half of all U.S. businesses are now home-based, you are riding the wave of a work trend that shows no signs of reversing. Don’t be one of the estimated 75 percent of home-based entrepreneurs who has nonexistent or inadequate insurance coverage. Protecting yourself is just as important as lining up your products and services and making a comprehensive business plan. So take some time, do your homework, talk to a few agents and make a wise insurance decision that will give you security in your new undertaking.