What Is the Difference Between Home Insurance and Business Insurance?

 

 

 

 

More than 15 million businesses in the United States operate out of homes, according to the U.S. Small Business Administration. Given that there are an estimated 31 million small businesses in the country, this means that close to half of small businesses currently operate out of residential properties.

Certainly, the COVID-19 pandemic has had a big impact on how we work and conduct business. This raises an interesting question: does a home-based business need business insurance?

In this blog post, we will answer that question and take a look at both home insurance and business insurance. Let's get started.

What Is Home Insurance?

Homeowners insurance is a form of property insurance. It covers damages and losses to an individual's property, along with assets and furnishings. In addition, it also provides liability coverage against accidents that occur within the home or on the property.

Generally, homeowners insurance covers both exterior and interior damage, damage or loss of personal assets, and injuries that arise while on the property. A homeowners insurance policy has a liability limit. This determines the amount of coverage in the event of an incident.

What Is Business Insurance?

Business insurance refers to coverage intended for businesses rather than individuals. It refers to a class of insurance coverage intended for purchase by businesses seeking to cover potential damage to their property, as well as contract disputes, lawsuits, and other incidents.

There are many different types of insurance for businesses. These include professional liability insurance, property insurance, home-based business insurance, product liability insurance, business interruption insurance, and vehicle insurance.

Business Insurance for a Home-Based Business

Homeowner's policies do not cover home-based businesses in the way that commercial property insurance covers businesses. It is best to get business insurance if your business operates from a residential property. The most suitable coverage for you will depend on your specific situation.

Generally, homeowners insurance does not cover the risks you may face if:

• You maintain inventory in your home
• You have employees
• Customers and clients come to your home
• Sensitive data is stored on your home devices

It may be possible that your home-based business is under-insured. We recommend that you speak to an insurance expert, such as Tom Needham Insurance Agency. That way, you can understand how to become fully covered.

When it comes to insuring a home-based business, there are many different options. These include a homeowners policy enforcement, an in-home business policy, or a business owners policy (BOP).

Get the Home-Based Business Insurance You Need

The bottom line is that if your run a home-based business, it may be uninsured. Rather than taking a risk with your business, we recommend that you find the right type of home-based business insurance.

If you would like to learn more about home insurance, business insurance, and home-based business insurance, don't hesitate to contact the experts at Tom Needham Insurance Agency. Click here to contact us.

Many Thousands of Types of Surety Bonds

 

Surety bonds are contracts entered between three parties:

The principal, the business or individual purchasing the bond in order to guarantee future work performance.

The obligee, the entity requiring the bond.  This is often a government agency regulating industries in an effort to reduce the chance of financial loss. 

The surety, the insurance company backing the bond.  The surety provides a line of credit to be used in case the principal fails to perform in accordance with the terms of the bond and the obligee makes a claim against the bond.

Although it's not insurance as such, a surety bond is a promise and guarantee by one party to underwrite the debt, default or failure of another party.  Surety bonds ensure that services being performed by one entity for another are fully and properly completed.  If not, the party suffering damages due to the service not being completed or being done improperly, may take a claim as the obligee for full compensation within the financial limits of the bond.

How Does It Work?

Regardless of the bond specifics, it is a legal agreement among the three parties as explained above.  The principal is the individual or the business who has promised to provide professional services and is the one who pays for the bond.  The obligee is the individual for whom the service is being provided and the one who suffers if the service is performed improperly or is incomplete.  The surety is the entity who provides compensation to the obligee in the event the principal fails to perform according to the specifics of the bond.

Types of Surety Bonds

Surety bonds can fall into one of three general categories:

Commercial Bonds - used to keep working professionals from either committing fraud or using harmful business practices.  These types of bonds are typically license and permit bonds and are commonly required by the government before issuing licenses and permits.  Some common examples include sales tax bonds, auto dealer bonds and business service bonds.

Contract Bonds - used to ensure contracts are completed according to the terms of the contract.  Commonly used in the construction industry, the three most common types are Bid bonds, Performance bonds and Payment bonds.

Court Bonds - put in place to reduce risks of financial loss to persons pursuing a court action.  

It's estimated that there are more than 50,000 bonds in the U.S.