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Do You Need Business Insurance if You Run a Home-Based Business?

Male carpenter on phone and laptop at the workshop

According to the U.S. Small Business Administration Office of Advocacy, in 2014, approximately half of the 29.6 million small businesses in the U.S. were home-based. Moreover, more than 60 percent of single proprietors and almost a quarter of small employer firms worked out of their homes. And although more recent numbers aren’t available, it’s to be expected that with the cloud providing anywhere, anytime access to business documents and tools, a growing number of small businesses don’t need business premises and instead, opt to work from home.

If you are beginning your own home business and have questions about finding a Los Angeles insurance agency, get in touch with Grand Mutual Insurance today.

Why You Need Business Insurance

When you have a home-based business, there are various considerations to keep in mind. Along with having a quiet place to work, high-speed Internet and a good security system, it’s also important to have business insurance.

The reason for this is simple: Your homeowner’s insurance covers a range of damages to the structure of your home and your property. It may also cover liability costs in the event a guest is injured on your premises. However, that’s the extent of the coverage — and you might not even want to claim some of these damages on your personal insurance policy because doing so can drive up your premiums.

In contrast, business insurance can cover a variety of damages, including the costs of stolen equipment, liability due to negligence or product defects, claims associated with workers’ compensation and the costs of business interruption. What’s more: Business insurance is a tax deduction — unlike your homeowners insurance.

Common Types of Business Insurance

As Entrepreneur reports, there are several common types of business insurance that you may need, depending on your specific situation:

  • Professional liability insurance — sometimes referred to as errors and omissions insurance — professional liability insurance covers your business against liability claims that may arise from a lack of performance or even mistakes. This type of coverage is typically provided in a customized policy that specifically addresses a company’s unique concerns.
  • Workers’ compensation insurance is mandatory in California. It covers medical costs, as well as disability and death benefits in the event an employee is injured or dies as a result of work. As soon as you hire your first employee, you need workers’ compensation insurance.
  • Property insurance is extremely helpful if you have equipment that you use solely for business purposes, such as office furniture, a computer, phone, printer and other items. In the event anything is lost or damaged, property insurance can help defray the costs.
  • Product liability insurance is a must if you manufacture or sell products. Regardless of where your company is in the supply chain, you can be named in a lawsuit seeking compensation for damages resulting from the use of a product.
  • Business interruption insurance is highly useful if you rely on your premises to do business. For example, if you manufacture hand-crafted jewelry from a home-based studio and you can’t use the space due to a flood, you’ll lose multiple days of business. Business interruption insurance covers some of the costs of losing business during interruptions like these.
  • Vehicle insurance is necessary if you use your vehicle to deliver a service or goods. In all other situations — such as driving to a meeting — your personal car insurance should cover you.

Los Angeles Insurance Agency

When starting any business, it’s important to get things right from the ground up. By teaming with a Los Angeles insurance agency like Grand Mutual insurance, you can give yourself the peace of mind you need to focus on building your company. For more information about insurance for your home-based business, contact us today.

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