Insurance for Home-Based Businesses

When you start a home-based business, insurance may not be your first priority, but you cannot afford to ignore it either. When the unexpected happens -- and it will -- having insurance coverage may mean the difference between the success and failure of your home-based business. You may not require all types of insurance listed here, but taking some time now to consider your insurance needs can save you money and headaches in the future.

Health insurance should be your first consideration. If you have just left your current job to start your own business, you may be eligible for COBRA, which will provide temporary interim coverage. This will keep you covered while you search for the best health insurance policy.

Disability insurance will guarantee you some income should you suddenly become unable to work because of injury or illness. Having this extra peace of mind may be well worth the extra money you pay.

Life insurance will help ensure that your family has the money it needs should you meet with an untimely death. Some lenders require that you have life insurance before they'll issue a loan; this guarantees that the loan will be repaid if you meet with an untimely end.

Business property insurance helps protect you against loss of inventory or equipment. If your business equipment or inventory is damaged in a flood, fire, or other disaster, this type of insurance will allow you to recoup your losses.

Comprehensive general liability insurance is necessary for your home-based business if you plan on having clients or customers visit your home. Whether you plan to hold meetings, allow customers to pick up merchandise, or have members of the public enter your home for any other reason, this insurance will protect you if someone is injured while on your property. This insurance will typically pay for your legal defense should you face a lawsuit as the result of a fall or other damage that occurs on your property.

Business interruption insurance will help your business recover from natural disasters. It will cover you for income lost during the disaster, and will pay for operating expenses that continue to accrue, even though your business isn't up and running.

Workers' compensation insurance is vital if you plan on having employees working out of your home. Without workers' comp, you'll be responsible for any medical expenses arising from injuries employees sustain while working for you. Many home-based business owners mistakenly believe that this type of insurance is only required by businesses that have a retail or separate location, but that's not the case. (Read "What You Need to Know About Workers' Compensation Insurance.")

Also read "Understanding Business Owner's Policies," about BOP, which is a type of insurance that packages together both property and liability coverage, at a single, usually more affordable, premium.

These insurance plans can help ensure that you are prepared to face any eventuality that might occur while you are running your own business. Disasters, accidents, and crises can strike at any time. By preparing now, you may be saving your company significant money over time.