Many of us overlook this fact while starting out. You may feel that you are only starting out small time and that you should conserve your capital for setting up your business. You may also feel that you do not need it as the inventory is small and can be left for later when your business grows some more. There is also that fact that no one really expects any mishap befalls their business and which is a perfectly normal way to think.
First of all you need to understand something about running a business, be it from home or other wise. There are certain rules that are the norm and one does not overlook. There are certain steps that one should adhere to even though they may seem to unnecessary at the time. Getting insurance for your business is just one of them. There are other principles as well such as Making A Business Plan, Planning Marketing Strategies, Determining Target Market etc. but these we will discuss in other writings.
There are three commonplace excuses that people think of for not getting insurance for your home craft business:
Your Business Is Too Small To Get Insured:
You may tell yourself that you do not need to get insurance for your home business just yet. You are just starting out and the business is small. That may be so. But if you expect the business to grow that nest time to get insurance for it is now. If you wait till the time that the business has grown, you may find yourself paying a higher premium. Although the premium depends on the cost of the inventory you are getting insured, the insurance company is more likely to make you favorable quotes if you have been their customer since the beginning with a good track record. The premium will keep increasing as the size of your business and the inventory grows. It is usually adjusted every year. But there are always special benefits for regular and old customers.
Insurance is expensive and you cannot afford it right now:
This is a misguided line of thought. When setting up a home business, you have to take all costs into consideration while making a financial plan. You are going to considering overheads costs of telephone, electricity, rentals etc. You insurance premium should figure in this plan. The sum of the insurance premium may seem like a lot when looked at individually but once it had been clubbed along with the other expenses of the business, it will simply become a part of it.
The best way to price a product is to try and offset all your over head costs in the costing of it. That is the only way you will be able to determine your net profits.
You do not need Business Insurance as you are going to be careful:
You are the optimistic. You do not believe that you need insurance for your home business as you are going to be careful. And since it is on your home, you feel it is doubly secure. The fact that running a business from home without having it insured can make the insurance on your home invalid as well. For example, if there is a theft, the insurance company can always argue that having a business at home increases the risk of threat because of the added inventory and stock that may be valuable. Insurance companies charge a premium based on the risk factor that they determine the lists for the asset. If you have not informed them of the business you are running at home they can well determine that you did not disclose the complete risk that they are undertaking to insure in the first place. And hence the insurance is void.
You can easily avoid this by informing your insurance company about the business that you run from home. Most of the time the company will be perfectly willing to insure your business along with your home by adding a small rider cleared already existing policy. This is probably will mean a much lesser premium for you as compared to taking an additional and individual policy for the craft home business.
As a final word, determine the rate that your company is willing to give you first your business insurance. If it is the same company as the one with which you have your own insured then they are likely to give you a good rate. But if you are not completely satisfied with the quotation feel free to look around with other insurance companies. If you do manage to find a lower rate you can even go back to your home insurance company and see if they are ready to match it.