Many people around the country are running home-based businesses nowadays. This is because of the convenience that home businesses offer. In addition to that, overhead costs are lower when businesses are run from home. This is because the business premise is part of the home while utilities like electricity, water, gas, and internet are available at a lower rate. Running a home business allows the owner to take care of personal chores conveniently during breaks. However, it can be difficult to distinguish business assets from personal assets. When it comes to insurance, it can be challenging to identify the coverage needs of the home business. If you are a business owner with a home-based business, you can try the brokers at SmartBusinessinsurance.com.au for guidance. The team will assess your business to identify your business coverage needs.
Why Insuring a Home Business is Challenging
If your home gets razed down, can you claim the entire house and personal belongings in other parts of the house that are not used for business? If the cause of the fire is the home kitchen, can the insurer still pay for the damage or losses in your home office? If you use your car for business, will the insurance company pay for equipment and inventory damaged during a crash? These are all important questions that can be answered by experts from the company. The following are reasons why you need home business insurance:
i) Protection from Lawsuits
If a client slips and falls in your home office, they can file a slip and fall injury lawsuit against you. The cost of legal fees can be incredibly high. On the other hand, any damages awarded by the court can put a huge dent in your finances. In some cases, businesses are usually forced to file for bankruptcy to avoid paying the damages awarded by the court. To protect your personal and business assets and ensure your business continues to thrive, be sure to purchase home business insurance that offers sufficient public liability protection. Be sure to read the terms and conditions to ensure nothing important has been excluded from coverage.
ii) Business Income Coverage
The income of a home-based business can decline for a variety of reasons. These reasons are usually stated in an insurance policy that offers protection for business income. An economic recession or depression, disruption in the industry, natural disasters, and pandemics, such as the COVID-19 pandemic, are known to reduce business incomes. Since you have bills to pay regardless of external factors, you’ll need business insurance that offers business income protection to ensure your business will not be adversely affected. When an insured event occurs and your business income reduces considerably, the insurance company will pay the difference between the expected income of your business and the actual income.
iii) Commercial Property Insurance
A home business insurance policy protects business assets. This includes furniture and fittings in the home office, computers, and phones used for business. If these items are stolen from your home, you will be compensated by the insurer. If you run a catering or baking business from home, commercial property insurance will replace kitchen equipment or repair any damage they may sustain during an insured event.
iv) Product Liability Protection
If the goods or services you offer from your home cause harm to a customer, you may face a product liability lawsuit. Fortunately, home business insurance offers product liability protection. This means the policy will pay the legal fees incurred and compensation awarded by the court in case you lose the case.
Since you’ll also be using the home kitchen to prepare food for the family, you will have to put in place safety measures to make the home kitchen safer for both you and your customers. Be sure to do the necessary research to learn about safety measures that you must put in place if you plan to use a home kitchen for commercial purposes. Your insurer will also confirm that those safety measures are in place before underwriting your policy.
The terms and conditions of a policy, the inclusion clauses, and exclusions must be read and understood to ensure you can make decisions that are well-informed. Be sure to take your time to read through the policy document before you make your final decision. This is crucial because you do not want to pay for a policy that does not cover certain events or certain items that are important for your business. If you have any concerns regarding a policy, be sure to seek clarification from your insurance broker.