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Business Assistance:
Home-Based & Micro Businesses in Mississippi - FAQ 13

Do home-based businesses need insurance? Doesn't my homeowners policy provide the coverage I need?

"Liability, liability, liability!" is one of the first things an attorney who works with many of our home-based business workshops says when he addresses a group of beginning entrepreneurs. Unfortunately, it is a fact of life that must be taken into consideration when you are a business owner --- are you protected??? Many people who begin businesses in their homes never even think about the liability issue --- they assume that their home owners policy will cover the business since it is located in the home, and the business is small, and just part time, and nothing will ever happen to them, etc., etc., etc. The question is, does your homeowners policy cover liabilities associated with your business? Consider the following situations:

A client comes to your home for a business meeting and trips over your child's roller blades left on the walkway --- and breaks his/her arm --- are you covered?

You rewire a client's computer in your home-based computer repair shop. The computer later overheats and burns up your client's home --- you wired it wrong --- are you covered?

You are a home-based CPA, you advise your client to take certain deductions on his/her taxes. The IRS later audits your client, disallows the deductions, assigns penalties and interest, and puts your client out of business --- are you covered?

And what about property coverage? Consider the following situations:

Your home office is in your detached garage --- are you covered?

You run a small retail business such as a salon, repair service, craft shop out of a little building out behind your home --- are you covered?

Your home office in is a converted bedroom and you just purchased a new computer system that cost $10,000 --- your home is broken into and your new system is stolen --- are you covered?

You just finished manufacturing a $15,000 order of widgets and the client is going to pick them up from your home office tomorrow and the house burns --- are you covered?

Your laptop you use for sales presentations is stolen from your car --- are you covered?

Your home office burns and ALL the data stored on your computer is lost --- are you covered?

The list of possible scenarios could go on and on --- the point is that a catastrophe could put you out of business quickly if you are not properly protected. The important thing to remember is to do your homework and make certain you ARE COVERED!