Many people who operate home based businesses make the mistake of thinking they do not need business insurance. The majority of these people own their own homes, and they make the assumption that their homeowners insurance will automatically cover their home based business. However, this is far from being accurate.

Not only will your homeowners insurance not cover your home based business, but your business may also cause your home insurance to become void. As the name implies, home insurance is designed to protect your house. If you are using the home for something such as operating your business, your policy may become voided. 

If you are operating a business out of your home, there are specific forms of business insurance you’ll need. However, the type of insurance you choose must be connected to the type of business you operate. One of the types of insurance you will want to get is called contents insurance. To estimate the cost of a potential lost, look around your office and estimate how much it will cost to replace all the equipment you have. If you are like many home based business owners, you probably have a computer, fax machine, and printer. You may also have a cell phone that you use for your business. Don’t forget to figure in the cost of the desk. 

In most cases, a homowners policy will only have a limit of about $2,000. Depending on how much you have spent on your equipment, this may not be enough, especially if you have purchased it brand new. It is also important for you to analyze whether or not your equipment remains in your home, or are you constantly moving it around. 

If you are constantly moving around your equipment, it is important to realize that your homeowner’s insurance will only cover it while it is in the home. If the equipment is damaged or stolen while you are transporting it, you will not be covered. Those who are using laptops, cell phones, tablet PCs, or PDAs will need to get separate contents insurance if they want them to be protected. These items are expensive, and replacing them can be costly. 

General liability insurance is also important for those who are operating a home based business. If someone is visiting your home, and they are injured as a result of a fall, they will be covered by this form of insurance. The difference between this form of insurance and homeowner’s insurance is that it will cover both friends, families and clients. 

Homeowner’s insurance will not. In addition to your clients, general liability insurance will also protect your employees. While owning a home based business will save you a lot compared to operating a traditional brick and mortar business, you will not want to neglect to set up business insurance. While you may not need every type of insurance that is available, failing to have no coverage can put you in danger of losing both your business and large profits.