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Choosing to run your business out of your home frees you from a grueling commute and the nightmare of office politics. However, along with its upsides also come some trade-offs. Understanding the complexities of your home-based insurance situation is vital if you want to be protected against costly risks.

Standard Homeowner’s Coverage Usually Is Not Enough

The reason why so many home-based business owners have inadequate insurance coverage is that they mistakenly believe their homeowner’s policy will protect them against any disaster that comes along. In reality, most entrepreneurs need additional endorsements or riders to be placed on their homeowner”s policy that will safeguard them against the additional risks that running a business causes.

What’s more, it is essential that you inform your homeowners insurance agent that you are running your business out of your house. Failing to do so or lying may lead to a termination in your policy, something that you definitely do not want. In the end, you will need coverage that protects you if you encounter a business liability situation. Examples include a customer becoming injured on your property or someone suing you if you gave faulty advice that caused them to become injured or to suffer significant financial loss.

Take Renovation Expenses Into Consideration

When you purchase homeowner’s coverage, you are insuring your property for what you believe it will cost to rebuild it should a fire or other disaster occur. This is not the same as the market value of your home, particularly now in an era when construction costs are extremely high.

People starting new home-based businesses often decide to renovate their home office space to make it more conducive to the company’s long-term success. While doing so is often an excellent idea, don’t get so caught up in the excitement of the project that you neglect to inform your homeowners insurance agent. That’s because your property may well become more valuable thanks to your hard work, meaning that you will probably need to adjust the limits of your policy.

Life And Health Insurance

Doing traditional work in an office has its drawbacks – that is probably one of the reasons why you decided to go off on your own. However, one of its advantages is that it probably provided you and your dependents with health insurance coverage. What’s more, you most likely also had a life insurance policy that terminated when you left your job.

Having your own home-based business does not mean you can forego these types of coverages that protect you and your family in the event of regular physical maintenance, medical crises and even death. One of your most important responsibilities as an entrepreneur is to take steps to ensure that this coverage continues. While it can represent one of your biggest expenses, it can also literally be a life-saver. Without it, you could incur devastating financial burdens that could cause your fledgling company to collapse under the strain.

Now that you have declared your independence from the traditional work rat race, you can breathe a sigh of relief and begin to run your business in the way you have always dreamed you would. Just be sure you safeguard your company, your employees and yourself with the right amount of professional indemnity insurance as you work to make your enterprise grow. By doing so, you will have both the peace of mind and the safety net you need.