Growth Strategies

Home Based Business Insurance

What you need to do to protect your homebased business
Magazine Contributor
2 min read

This story appears in the June 2006 issue of . Subscribe »

If you're starting a business from home, don't assume your homeowners (or renters) coverage is sufficient to cover any mishaps you might have. Properly insuring your homebased business is crucial to protecting both your business and your home.

Beth Parquette, president of Parquette-Clement Insurance Services, an insurance agency in North Port, Florida, says, "A homebased business needs all the same insurance [as] a retail space, a warehouse or any place of business." While most homeowners policies cover a limited amount of business equipment, she says, it's likely that what you have is worth more than your policy's limits.

So what kind of coverage do you need? Parquette says to make sure the following are covered:

  • Equipment: This includes everything you use to operate your business (computers, copiers, printers, telephones, etc.) plus other equipment used to provide products and services.
  • Inventory: This includes the products you sell and, if you do any of the manufacturing, the materials used to make them.
  • Vehicles: Any vehicle used for business purposes must be insured, even if it's personally owned. ncustomer property: If you take possession of your customers' property for any reason, it should be insured while in your custody.
  • Fidelity bond: If you (or your employees) perform work in customers' homes, a third-party fidelity bond will pay for losses due to fraudulent acts such as theft.
  • Workers' compensation: If you have employees, you need the appropriate coverage as required by your state.
  • Liability: Base your liability coverage on your potential risks. Consider whether you need professional liability; errors and omissions coverage; liquor liability (for event planners, caterers, etc.); off-premises liability (for working at another location); or product/completed operations coverage (for your product/work after it's done).

Choose an agent who understands your type of business and has access to a variety of homebased-business insurance products. Make this process a startup priority. Parquette warns, "If your carrier doesn't know you have a homebased business, in the event of a claim, there's a good chance your homeowners policy could be canceled."

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.