The Importance of
Home Business Insurance
Do you have adequate home business insurance?
If you work from home full-time or part-time, chances are your home owner's insurance doesn't cover your home business - at least not to the extent you need it to.
When starting a business it is common for people to save on expenses whenever possible. This is a good attitude to have, but when it comes to insurance it is important to realize that it is something no small business can afford to be without, whether it's a start-up or an established company.
Insurance for your home business is vital because the risk of losing everything you've worked for is too great to be ignored.
If you and your family are dependent upon the earnings from your craft business, you should provide yourself with as much protection as possible. Look upon insurance premiums as an additional cost of doing business and budget accordingly, also remember that all insurance premiums for business purposes will be tax deductible.
Insurance can be expensive, so you should shop around for it to find the best price for the coverage that you need.
Use an insurance agent who deals with home business insurance and with many different insurance companies and who will spend some time with you going over your needs and checking with the various companies on prices. Be aware that no two policy wordings are the same and each business type has different requirements. Go over your policy with your agent, being sure to check the small print to see what is not covered.
You may qualify for a discount if you bundle your policies (i.e. car, homeowners, business.) As more and more people pursue home-based businesses, insurance companies are starting to offer more comprehensive home business insurance coverage at better rates.
Make sure to talk to a number of insurance agents to find out who has the best rates, most options, and best coverage for home business insurance.
If you belong to a trade association, such as the Ontario Crafts Council or the Canadian Association for Home-Based Business for instance, you may want to investigate insurance packages they offer to their members. Sometimes they can negotiate lower premiums that may save you some money.
What is Home Business Insurance?
Insurance, according to Hamish Buchanan and Sarah Yates in CARO's Information for Artists: A Practical Guide for Artists, "is a contract by which relatively small sums of money are paid regularly to protect against much greater possible loss. The idea is to enable you to withstand a loss by receiving proper financial renumeration. Insurance is not an investment. If you suffer a loss, the insurance will put you back exactly where you were before the loss. You will not make a gain."
Why Do You Need Home Business Insurance?
Insurance can help you safeguard your business against crippling financial losses and promote its continuation, growth, and profitability to carry on business with minimum delay.
You should never avoid buying insurance for your home business on the basis that you cannot afford it. It is important to recognize the risks of operating a business from your home and the types of insurance policies available for protection against them. If you don't have proper insurance protection, you could be personally liable for all financial losses.
Your first step is to advise your insurance agent that you are operating a business from your home, inquire about the coverage provided by your home owner's policy as it may include several restrictions regarding businesses that are located on the premises.
Since most home policies are designed to cover a building occupied principally as a dwelling, it could become null and void if the home is used for business purposes, such as having a shop or studio in it. You will also need to have extra cover against a home business insurance plan to protect you for any risk areas involved directly or indirectly with your business operation. This is when you'll need to get a home business insurance package.
Keep Good and Detailed Records
Good records are essential for business insurance. In the case of loss, it is always the burden of the insured to prove the value of what is lost. Some insurance companies can be very adamant about this, requiring bills of sale and receipts, or other proof of ownership. After a theft or fire, it's difficult to itemize everything that is missing and document what you paid for it.
Another problem to overcome is the question of proof of existence. Therefore, you should ensure that all finished work be recorded in an inventory system. In this record you should have a basic description of each work, including medium, size, date, tentative selling price and inventory control number.
A photographic record is also an excellent idea, as it helps to not only prove its existence, but show a detailed description of the piece. Be sure to keep good records for your home business insurance, especially of your finances and inventory, so that your insurance company can easily compensate you.
The Types of Insurance for Your Home Business
Depending on the nature of your business operation the types of insurance coverage you might need will vary. There are many kinds of home business insurance available at a range of prices.
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