Today’s technology offers endless possibilities for new home-based businesses—possibilities that didn’t exist just a quarter century ago. Web-based companies (often run out of a kitchen or garage or family room) are abundant and those with the slightest entrepreneurial spirit now have the tools readily available to quickly and easily start a company. However, with hope and possibility come risks. And, to the person running a home business those risks might not be obvious.
Typically, home businesses are hosting their information in the cloud and are more than likely using a cloud service provider rather than large servers. It is not uncommon for cloud service providers to bully unsuspecting clients by burying fine print in service contracts which either goes unseen by the small business owner or seen yet misunderstood by the small business owner. For example, if the cloud is down for a period of time, does the contractual legalese relinquish all responsibility from the provider thus leaving the home business owner to lose business without a mechanism of recouping that loss?
Although small businesses don’t want to spend thousands and thousands of dollars on insurance (and probably shouldn’t,) there are some relatively cheap and effective insurances that can help to mitigate a home company’s risk. We recommend:
- Obtaining Cyber Business Income which responds to a breach of infrastructure and is used if the cloud goes down. This is the coverage needed to recoup the lost revenue.
- Our small business clients negotiate their cloud service contract to include a clause stating “If my business is down for x amount of time, the cloud service provider will reimburse me and/or stop charging me for services.” This clause can be significant in that it transfers the risk to the provider and not the insurance company.
- Small home businesses not obtain traditional tangible business income. This insurance responds to physical damage (fire, water, etc.) which is likely addressed in the business owner’s home owners insurance policy.
- Home business owners consult with a risk and insurance expert to not only review service contracts, but also to mitigate insurance expenses by suggesting what insurance is absolutely necessary.
While home-based businesses don’t require a great deal of insurance, some is necessary to manage the risks that have the potential to cost a business its future.
About JKJ
Johnson, Kendall & Johnson (JKJ) is an insurance brokerage and risk management firm that has been managing corporate and personal needs nationwide for over 60 years. JKJ offers customized property and casualty insurance, risk and safety management services, claims consulting, group benefits, individual life insurance, home and asset protection program development, financial services and retirement planning. JKJ creates programs unique and specific to each of its clients. Johnson, Kendall & Johnson is licensed in various lines of business in all 50 states, with access to all of the major insurance markets.
