Home Business Liability Insurance

Summary: In this litigious world, whatever we do exposes us to the risk of being liable to cause personal or economic injury or loss to another person. If you’re a home business owner, this liability could be potentially damaging to your business.

To lessen this possibility, or to the least, lessen the potential of a lawsuit causing damage to your home business, experts advise that aside from your home insurance, you get insurance to protect your business from the threat of lawsuits and get payment for the cost of fighting them.

Your content or property insurance for your home don't adequately protect your home-based business, and such activity could even violate the home insurance if they were undisclosed.

The type of insurance you need would depend on the kind of the business that you run at home. Generally, you’d need a content insurance for the equipment you use in running your business to ensure you get payment for your loss in case they were stolen and got damaged; and a general liability insurance to protect your business from injuries that can happen to clients or employees in the business’ premises.

If your business sells a product, product liability insurance is advisable to protect you from liabilities resulting from the product's non-performance. If yours is a service-oriented business, professional liability insurance is a must. Professional liability insurance will protect your personal assets and pay for your defense if a client sues you for damages that your actions have done as a professional. It will also pay the client who suffered damages as a result of your actions. Professional liability insurance could also take the specific form of malpractice insurance, errors and omissions insurance, or completed operations coverage if you provide services at client sites. Another form of insurance is business interruption insurance, which will cover lost revenue once an operation is shut down due to disasters.

In deciding to get liability insurance for a home business, you are advised to first perform an inventory of all the things involved in your home businesses, and accurately determine their value to get a gauge as to how much you should be sufficiently insured. Your home insurance could protect you only up to about $2,000 to $2,500 for claims in the event of a loss. You might even need other insurances for equipment you use outside the business premises – your vehicle or a laptop, for instance.

In searching for a liability insurer, it is important that you seek out those that work specifically with home businesses or with your line of business. Then, you could interview liability insurance companies to determine the level of coverage they offer for the amount of premiums paid. You could also ask for possible discounts.

It is also important that you know whether your target insurer offers a home business liability coverage that covers the costs of litigating a lawsuit. It is also advisable that you disclose your company's past lawsuits or settlements if any, so that an insurer can devise an insurance policy that will cover such problems in the future.

To limit what you spend on insurance, prioritize those that you really need, avail of packages rather than individual insurance, and take advantage of group rates.