Article

03
Aug
2015
why do we need insurance

Why Home-Based Businesses Need Insurance, Too

This is the age of the makers and the doers, DIY and small business startups. Over 30 million Americans reportedly work from home and would not have it any other way. If you are a stay-at-home-mom (SAHM), it’s a safe bet you’ve thought about how to supplement your household income. One way to do that is to telecommute or work from home for an existing company. If you don’t like that idea, you can start up your own home-based business. According to Rocky Mountain Insurance Information Association, there are many different types of small home-based businesses and many of those businesses are underinsured or not insured at all.

Moms have a lot on their minds. We are responsible for remembering where everything was last seen, cooking meals to feed our family, keeping the house clean, keeping the kids and parents healthy, remembering doctor appointments and play dates, and sometimes we have what I like to call “Mommy Brain”. Something slips our mind because of everything else that is filling it up. It’s more common than you would think for home-based business owners to assume that their business would be covered under homeowner’s or property insurance. After all, the business is operated in and around your home. In most cases, homeowner’s insurance is not enough.

Typically, a homeowner’s policy will only cover a portion of business equipment on the premises and even less if something happens off the premises. Notice the key words: business equipment. That’s it. What happens if you are a wedding photographer hired to shoot a large wedding and something terrible happens just before the big day? Your expensive camera and lenses are stolen leaving you without your gear and thus rendering you unable to provide the service you were hired for. You cannot be paid for your service if you cannot provide and in such a case, you will probably have to refund the client’s deposit. A homeowner’s policy might pay you a measly $250 for your equipment if you were off of your property or $2500 if it happened on your property. Chances are the value of your stolen equipment is higher than what the homeowner’s policy will pay. It does not cover lost income because you could not work without your gear or the deposit you had to refund. How are you supposed to get your photography business back on its feet with $250? A situation like this can destroy a home-based business and that is the last thing a SAHM wants to have on her mind. This is where small business insurance comes in.

Whether you photograph weddings, bake and decorate cakes, or operate a licensed day care out of your home, your business is important and valuable. With the right comprehensive home business insurance coverage, your stolen camera(s), additional lenses, memory cards, etc. are covered. Your loss of income due to the theft is also covered.

Suppose you, Super Mom, have a very important soccer game to cheer on the same day as a client’s wedding. You send your assistant to photograph the wedding but on the way to or from, she gets into a minor car accident. Since she was performing work for you, you could be held liable. Have no fear; business insurance will cover you.

Let’s say you make it to the wedding with all of your equipment and spend three to six hours snapping memorable photos for your client. The drive to and from is safe and uneventful but when you sit down to edit the photos you took, you discover there was a problem with the memory card and it ruined the photographs. Business insurance will cover legal liabilities for the ruined photos. It will also cover you if the clients decide to sue.

Business insurance is generally offered from most insurance companies for a relatively low annual fee. Talk to your insurance agent if you think home business insurance is right for you. Protect yourself and your business so you can spend less time worrying and more time thinking about your family.

References:
"Home-Based Business Insurance." Rocky Mountain Insurance Information Association. RMIIA, n.d. Web. 29 July 2015. <http://www.rmiia.org/business/home_business_insurance.asp>.

Rapoza, Kenneth. "One In Five Americans Work From Home, Numbers Seen Rising Over 60%." Forbes. Forbes Magazine, 18 Feb. 2013. Web. 29 July 2015. <http://www.forbes.com/sites/kenrapoza/2013/02/18/one-in-five-americans-work-from-home-numbers-seen-rising-over-60/>.

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