Your Personal Finances

Employment Issues

Many people dream of starting their own businesses and working from the comfort of their home. But, if your dream of becoming a home based entrepreneur comes true, be sure to ensure you have the proper insurance. Many of us take insurance for granted when we work for a good-sized company.

My sister left a big company with lots of benefits to be an independent wholesaler for a number of clothing lines. In her case, she had to buy more life and disability insurance, both of which were benefits at her previous employer. In addition, my sister's income is tied to the samples she shows to prospective buyers. So she had the samples insured in case they were ever damaged or stolen. She also had to buy a van and now she has to pay for business insurance on that vehicle versus cheaper personal use insurance.

But, she also needed to evaluate her home insurance policy to see if it covered her office equipment. And, she had to check to confirm that clients who come to her home to look at her samples are covered by her liability insurance. Many small business operators don't realize that most home policies don't cover home businesses properly. A typical homeowner's insurance policy excludes liability and limits coverage of all property used to operate a business.

Many insurance companies have developed specialized packages for home-based businesses. For example, you can buy a package that gives you equipment coverage, theft coverage and inventory coverage. You can also buy loss of income coverage (due to damaged equipment). You can also get liability coverage which looks after damages in the event a client slips and falls at your home, and product coverage (if your product causes an injury). You can also get professional liability if you are a member of a profession.

Working at home would be a welcome change for many people, but when setting up a home-based business, be sure to talk to an insurance advisor about properly protecting your business.