What risks is my home business exposed to?

Few home business owners are aware of the many risks they face on a daily basis. They may believe that their Homeowners insurance policy will protect them against any damage or loss caused to their homes, or against liability. This can't be further from the truth.

Home Business Exclusions

Home insurance policies have specific business coverage restrictions, such as the following:

• Homeowners policies don't provide any liability protection for home-based businesses.
• No detached structures on the premises of the insured are covered under a Homeowners policy if they are used for business purposes.
• Homeowners insurance policies provide very scarce, if any, compensation for the loss of business personal property.

How to Identify Home Business Risks

Any structures and items you use for your business and take for granted, are exposed to the risk of being damaged, destroyed or stolen. Furthermore, you can be sued for liability if anyone gets injured as a result of your home business operations. Here are some of the risks that you, as a home-based business owner face:

Risks to Property

You probably operate your business from a certain structure on the premises of your primary residence. Whether it is part of the home structure, or a separate, detached building, it is exposed to the same risks as your primary residence. So is your business personal property, such as computers, office equipment and supplies, furniture, etc. You should make an inventory of all your business property and determine how much it will all cost to be replaced.

Risks of Liability

Unfortunately, Homeowners insurance does not cover business liability for home-based businesses. You will need to purchase a separate liability policy because the liability risks you face on a daily basis are too many to ignore. You can be sued for business-related injuries that happen on the premises of your home, products liability, errors and omissions, etc.

Employee Risks

Your employees may suffer occupational injuries on the job, for which you will be held liable. This is why you need to provide workers' compensation insurance for every employee that you have: it will cover all medical expenses and lost wages in the event of an injury.

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