2 Reasons Why Home-Based Businesses Need Commercial Insurance

Most home-based businesses tend to be smaller endeavors, and they may seem to have limited risk exposure. All at-home businesses should have commercial insurance regardless of how large or small they may be, though. Here are two reasons why commercial insurance coverage is so important for these businesses.

1. Home-Based Businesses Have Equipment

First, almost all home-based businesses have at least some equipment to protect. This may include production equipment and inventory if a business makes or sells products, and it can include other items as well. Desks, computers, and file cabinets are common items that even the smallest at-home businesses frequently have.

Without commercial insurance, your home-based business would have to replace all of its equipment and supplies if something ever happened to the items. This can be expensive if your business has a lot of equipment or carries a big inventory, and even replacing a single computer can prove costly depending on the machine's specs.

With commercial insurance in place, your business' inventory and equipment would be protected in the event of a covered loss. Should equipment be stolen from your home or damaged in a house fire, insurance would pay to replace the items.

2. Any Business Might Be Sued

Second, any business could face a liability lawsuit in today's world. Large companies with substantial assets may be more exposed to potential lawsuits, but small, home-based businesses also can be sued in a legitimate lawsuit or by an opportunistic lawyer. Moreover, smaller businesses rarely have the funds needed to fight a lawsuit if they face one.

Most commercial insurance policies include liability insurance that helps protect against the risk of a potential liability suit. If a business faces a covered liability suit, an insurance policy will cover the cost of defending the business and settling (if necessary) — up to the policy's limit.

Liability insurance is a particularly important consideration if customers or clients come to a home for business-related purposes. Whenever a customer or client is on a business's property, the business could be sued if the customer is injured in a common accident.

Hairdressers who cut clients' hair in a spare room, for instance, should strongly consider carrying liability coverage. A commercial liability policy could help protect the business if a client tripped on a cord and fractured their arm in the fall, for instance.

Even businesses that don't serve customers or clients on-site may still need liability protection, however, because there are many reasons why customers might sue. Data breaches, breaches of contract, and professional mistakes can all lead to a lawsuit.

For more information, contact a commercial insurance provider.