Working for yourself, controlling your financial destiny, and having the freedom to spend time with your family are just some of the reasons that plenty of people, especially moms, own home based businesses. You also believe in the brand, love how it’s changed your life, and want to share that love and joy with the rest of the world.
It’s a worthy endeavor that you should be proud of.
There’s a problem, though. Most people with home based businesses don’t have nearly enough or the right kind of insurance to protect themselves, their business, and their inventory when something bad happens. It doesn’t matter if you sell leggings from LuLaRoe or weight loss miracles through Beachbody or Herbalife, if you’re selling products directly to consumers for a larger company, insurance is something you’ve got to think about.
Your Homeowner’s Insurance Isn’t Enough
While you may be able to file a claim against your homeowner’s insurance if part of your inventory is ruined or stolen, there’s a good chance it won’t cover the entire amount. LuLaRoe consultants have at least $5,000 worth of merchandise at any given time, and that’s just the bare minimum. Your homeowner’s policy might cover that, but if you’ve got $10,000 or $20,000 stored in your home, you’ll be the one responsible for the cost to replace it.
Inventory is only part of the equation. If customers come to your home or you travel to deliver product, liability is also a potential problem. A customer who gets hurt while doing business with you may sue the company - or they may sue you. Your homeowner’s policy won’t cover that kind of liability. Lawsuits and legal fees could bankrupt you without the right insurance coverage.
Home Based Business Insurance Coverage
Now that we’ve probably made you a little nervous, what kind of insurance should you have? It all depends on the type of business you run, the amount of inventory you keep on hand, and how you work. Here are some common types of coverage you’ll want to discuss with your insurance agent.
Contents Insurance: Depending on your inventory, you may be able to add an endorsement to your current homeowner’s policy or you may need commercial contents coverage to help pay to replace damaged or stolen inventory.
Spoilage Insurance: If you work with food-based, products that can go bad in the wrong conditions, or cosmetics that can be ruined by extreme temperatures or lack of electricity, this will protect you when your inventory is spoiled.
Off-Premises Liability: Whether you sell at trade or craft shows or you deliver orders to customers, this will cover you if a customer is hurt or experiences property damage while doing business with you.
Product Liability: If the product you’re selling causes a customer to become ill, damages their property, or harms someone, product liability protects you.
Auto Liability: Your personal auto insurance won’t cover you if you get into a car accident while you’re traveling for business. You need a commercial auto insurance policy to do that.
Business Income: If a covered disaster forces you to stop working and disrupts your income, business income coverage will help replace some of your lost income until you’re back in business.
Flood Insurance: If you store a lot of inventory in your home, and you live in a flood zone, it may be worth buying flood insurance specifically to protect your inventory.
You don’t necessarily need all of this coverage for your home based business. Every business is different, as is every business owner. It’s important to talk to a qualified insurance agent about your specific business to help you find the right coverage.
Contact us at Charlotte Insurance. We want your business to grow and succeed. To do that, you need the right kind of business insurance, and we can help you find it.