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Home Business Insurance: Don't Believe These Five Costly Myths


Being your own boss is the ultimate American Dream. If you’re starting or already running a home-based business, you’re in good company. According to Forbes.com, over half of all small businesses are now home-based. As you know, succeeding at business takes an enormous amount of preparation and hard work – and it also takes a smart business insurance strategy.

Unfortunately, many home business owners don’t fully understand what kind of business insurance they need or whether they need it at all, and they believe some common and costly myths. Whether you’re just starting out or have a well-established home-based business, you can tip the odds of success in your favor by thoroughly understanding your risks and taking steps to manage your exposures with the right insurance coverage. Start by avoiding these five common myths:

  1. If you have homeowner's insurance, you don’t need business insurance. This is probably the most common myth, and one of the most costly. Many homeowner's policies don't cover business property or operations. Some insurers could even cancel your homeowner’s policy for running a business out of your home without the appropriate protection or licenses. It’s easy to add an endorsement or rider to your policy to cover business assets, but you might be better off with a Business Owner's Policy (BOP), which would bundle your General Liability (GL), Property, and any other coverages you might choose.
  1. If you get sued, you can just shut down your business. Unfortunately, it’s not that easy. Closing your doors won’t make a lawsuit or a judgment magically disappear. And if your business assets aren’t enough to cover the judgment, your personal assets may be at risk depending on your business structure and your insurance.
  1. Your clients love you and would never sue. No matter how long you’ve been in business or how stellar your reputation is, one mistake could wrap you up in a lawsuit for professional negligence, incomplete or shoddy work, or errors in delivering your services. And that could cost you everything. Consider professional liability or errors and omissions coverage if you offer advice, instruction, or guidance to customers as part of your business.
  1. Your little one-person home business is too small to need insurance. Don’t fool yourself. If you have customers, you have risks. In fact, being small could be the best reason to have insurance. Would you be able to take the financial hit of a liability suit without it? Most home-based business owners couldn’t even afford the legal defense costs.
  1. Your home business doesn’t need inland marine insurance. Inland marine coverage protects property and equipment in transit. If you ship expensive merchandise, attend tradeshows and exhibits, store inventory offsite, or transport expensive equipment, you may have an overlooked exposure.

There’s another common myth – that buying insurance is complicated and time consuming. Contact a FICOH independent agent and put that myth to rest. Your agent will evaluate your risks, recommend the coverages you need to protect your business, and explain it all in plain English.