Entrepreneurship is a growing trend in the United States, and today more than ever before many would-be entrepreneurs are deciding that the best place to start their own business is right in their own homes. And why not? Home-based businesses offer low barriers to entry and minimal start-up costs. In some cases a computer and a high-speed Internet connection is all you need.
Despite the ease of entry, however, operating a home-based business is not without some risk. Like any entrepreneur, the owner of a home-based business can be sued by an unhappy client or incur property damage due theft or fire. Further, these losses typically are not covered by a standard homeowner’s insurance policy, which means the business owner is personally liable if anything goes awry.
How Business Liability Insurance Protects You
Attorney’s Fees and Legal Costs
Perhaps you think that because your clients don’t come to your home to purchase goods or services, you are immune to legal liability and lawsuits. If that’s the case, think again. Even an online business can be sued if it sells a defective product that injures a customer, or it makes false or misleading advertising claims. Even if you have done nothing wrong, the cost of defending against these lawsuits can be extraordinarily high. A business liability insurance policy typically covers these costs, including attorney’s fees and any settlement ordered by the courts.
Personal Injury Claims
No matter what type of home-based business you own, you are open to personal injury claims. For example, if you own a home-based cleaning business and you spill water on the floor at someone’s home and the homeowner slips and falls, that person can sue you for damages. Similarly, if you sell home-made baked goods that cause a customer to become ill, you can be sued. Even claims of slander or libel must be defended in court.
Business Equipment and Inventory
Any equipment you purchase for your home-based business can be damaged or stolen, and most homeowner’s insurance policies will not reimburse your replacement costs. Business liability insurance protects you against these kinds of losses, as well as the loss of any business inventory you store in your home. It also covers damage to others’ property and items such as important documents and files.
What Is Professional Liability Insurance and Who Needs It?
Professional liability insurance is a type of insurance that protects business owners who provide nontangible services, such as expert opinions or advice. Also known as errors and omissions coverage or professional indemnity insurance, these policies help defray legal costs in the event your business is sued for negligence in connection with a service you performed. Professional liability insurance is essential coverage for home-based professionals and service providers such as tax consultants, real estate agents, estate planners, lawyers and accountants.
Whether you have a well-established home-based business or are just starting out, don’t count on your homeowner’s insurance policy to protect you from financial loss. Contact a business insurance expert to discuss a business liability insurance policy today. Our agents are standing by to answer your questions and provide advice about the best products for your specific needs. Give us a call at 516-292-3780 or request a free consultation online now.