Home Business Insurance
I have started to bake cupcakes from home. At what stage do you think I need to get home business insurance and is it really necessary?
Currently I am only selling about 500 cupcakes a week but business is picking up and I am having people come to the house to collect their cupcakes. Also, what happens if I need to have someone help me bake - should they be covered by insurance as well?
Thanks so much for your question about home business insurance.
Statistics show that about 40% of home-based business owners are uninsured because they incorrectly believed that their home business would be covered under their home insurance. This is a startling statistic but, at the same time, not unexpected.
You really need to check the insurance laws which govern your country or state as there can be some quite subtle differences between them. The main thing to be insured for is liability as you need to cover yourself if someone slips as they come up your driveway to collect their order.
The last thing you want is for a bride to claim that you ruined her day because the cupcakes were not as she ordered. Or imagine if the bride tripped on her way out of your house as she was carrying her cupcakes to the car.
(I would recommend that you take a photograph of the completed order and also, if possible, one with a happy bride-to-be standing next to it. Also make sure that the bride signs an agreement that the order was completed as per her instructions.)
Liability insurance also covers you in case someone gets food poisoning from your cupcakes. It covers you for events outside of the home which is exactly what is needed for a home based bakery business.
You really do need to thoroughly investigate your state's laws. It is worth making a phone call to your insurance representative to inquire about your current contract and to get feedback as to what should be included to cover your business activities.
It might just be another expense when you first start out, but $20 or so a month for home business insurance will be a small expense if anything happens.
In answer to your other question, please also speak to your insurance representative about extra insurance needed once you start employing others in your home-based business.
I hope this helps.
Regards and good luck with your business.