Whether you are telecommuting for the boss or running your own show, working out of a home-based office can be very convenient. Trading the daily commute for a walk down the stairs is certainly attractive, but do you have the protection you need?
If your office is in your home, you may assume that your homeowners insurance will automatically cover your equipment and shield you from business-related risks, but that is not necessarily the case. Depending on the nature of your business and the specifics of your existing coverage, you may need to purchase additional insurance for your home office. Here are some smart steps to take if you are one of the millions now working from home.
Talk to the Company That Provides Your Homeowners Insurance
If you have not already done so, you should contact the company that currently provides your homeowners insurance. Depending on the specifics of your policy, you may or may not be covered for the furnishings and computer equipment your home office contains.
Your insurance company will not know you are now running a business out of your home unless you tell them, so make sure they understand your new circumstances, and that you understand how those changes could impact your coverage and your premium. Once your insurance agent has all the facts, he or she can provide you with a list of coverage options for not only your home office but the rest of your property as well.
Tally Up the Cost of Your Office Equipment
Unless your employer picked up the tab, outfitting your home office was probably an expensive undertaking. There were computers to buy, cables to install, electric lines to run and furniture to purchase. Now that all those furnishings and pieces of equipment are in place, do you really know how much they cost?
Tallying up the cost of your home office is important, not only for insurance purposes but for tax planning as well. You may be able to write off part of the purchase price of business-related equipment and furnishings, and having an accurate total to work with will make your life a lot easier.
Assess Your Risks
Some home-based businesses are at more risk than others, and the amount of extra coverage you need for your home office will vary along with those risk factors. Before deciding how much insurance you need, think about the specific risks you face and let that information be your guide.
Do you routinely welcome clients and customers into your home to discuss their business needs and what you have to offer? If so, additional liability insurance may be needed to protect yourself from injury claims. Home-based businesses are often seen as easy targets for nuisance lawsuits, and a single settlement could cost you dearly.
Does your home office contain expensive equipment or specialty supplies? If so, the cost of replacing those items may be more than your current coverage limits. You may need to purchase additional insurance to ensure fast replacement of damaged or destroyed equipment, so your business can get up and running fast.
Running a home business can be a great way to make money and take charge of your future, but this kind of operation is not without its risks. If you want to ensure the continuity of your business and prevent unnecessary losses, you need to protect yourself with the right insurance. The more you know about the dangers your home business faces, the more you will understand the importance of researching and purchasing the right insurance coverage.