Does a Home Business Need Insurance? Questions to Ask

June 20, 2015 | By | 2 Replies More

Profit, loss and risk crosswordOne of the biggest questions that business owners face is whether they are properly insured. Risks are all around us. For example:

  • Products may result in damages or even death;
  • An employee or worker may meet an accident, or worse, death while working;
  • A client may fall or slip when visiting the place of business;
  • A fire, flood or other natural calamities may destroy your inventory and the business;
  • A robbery could take place resulting in losses in inventory and assets
  • Some things beyond your control may happen that could result in failure to honor contractual agreements, resulting in a breach of contract lawsuit

There are many things that can happen to a business – whether a one-person business or a multi-million dollar conglomerate – that requires the protection and sense of security that business insurance can provide. Even seemingly small incidents can lead to significant blows to your business, including lawsuits and medical expenses.

Even for a home business, ignoring insurance can cost your business thousands, if not millions, of dollars. It is important to consider the risks faced by your industry in general and your specific business in particular and whether buying an insurance can help lessen those risks. Yes, insurance can be costly, but you need to think of it as a necessary expense of the business.

How do you know whether you need insurance? Here are some helpful questions to help you determine the insurance needs of your home business:

  • What are the assets of your business and how much would it cost to replace them?
  • Do you handle or care for non-owned property, such as client’s equipment and valuables?
  • Do you own the facility? If yes, is the replacement amount on the policy sufficient to cover a total loss to that facility? If so, do you have the proper coverage as required by the lease?
  • Are customers regularly on the premises? If yes, does your present coverage adequately protect you from them?
  • Are there employees on the premises? How many? Who does what?
  • Is there inventory on premises? Is it properly valued to cover a loss?
  • Is there equipment on-site, which is leased and, if owned, properly valued?
  • Would the loss of a piece of equipment interrupt the entire process? If the answer is yes, would this disruption cause a significant loss to the organization? Is the company covered under any of the present coverage?
  • Do you depend on suppliers for key aspects of this process, and if so, would the loss of this supplier interrupt the process in any way?

These are questions that you need to ask yourself — not as a onetime thing, but on a regular basis. As your business grows and expand, your business insurance needs may also change.

Insurance may not be at the top of your mind when you start a business, but it is critical to your business operations. Take the time to learn and understand insurance. It’s not easy, as insurance has a language and cadence of its own. However, if you want to buy the right type of insurance for the right amount, it is essential to learn its language and the different types of policies.  After all, better understanding leads to better management, which leads to savings. Your goal should be to maximize your insurance coverage for minimal cost.


Lyve Alexis Pleshette

Lyve Alexis Pleshette is a writer for She writes on various topics pertaining home businesses, from startup to managing a home-based business. For a step-by-step guide to starting a business, order the downloadable ebook “Checklist for Starting a Small Business” from

Does a Home Business Need Insurance: Questions to Ask
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Does a Home Business Need Insurance: Questions to Ask
One of the biggest questions that business owners face is whether they are properly insured. Learn the questions you need to ask to determine whether you need business insurance
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  2. Jyoti Sharma says:

    thanks a lot for an awesome article

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