Homeowners Insurance & Your Home-based Business

Regardless of why you’ve began a home-based business, ensure you don’t find yourself with insufficient insurance protection.

A number of home-based business owners presume their homeowners insurance will offer the essential protection in case of a loss.

However, this is frequently not the case. In fact, a typical homeowner’s policy offers only $2,500 coverage for business equipment, which is typically not sufficient to cover the entire business property.

Therefore, it’s imperative you educate yourself on the kind of insurance you’ll require for the protection of your new venture.

Insuring Your Home-based Business

Businesses face different risks that your homeowner’s policy doesn’t cover, such as liability. For instance, if a client sustains injuries in your business premises, your policy might not cover such a situation.

Additionally, this policy doesn’t typically cover losses such as stolen data or unintentional copyright infringement. Bear in mind that insurance firms vary considerably in the kinds of business operations they’ll cover under the different options they provide.

Therefore, it’s prudent to shop around for price and coverage options. As a home-based business, you must ensure you have the correct insurance level to protect your business, home, and yourself.

Depending on your business’s type, complexity, and the insurance company from which you make a purchase, you might wish to consider any of these.

Rider to a Renter’s or Homeowners Insurance Policy

The most affordable home-based business coverage is a rider or add-on that broadens a renter’s or homeowner’s policy to cover your company. The price of such an add-on is minimal-possibly $100 annually though it generally offers approximately $2,500 of extra coverage.

This form of insurance may be suitable for a one-person business without several valuable equipment or numerous business-related clients.

If it’s unlikely that you would suffer major loss if you’re incapable of operating for a while due to fire or another catastrophe, this insurance may be suitable for you as well.

In-home Business Policy

This policy offers more comprehensive coverage for liability and business equipment than a rider to a homeowner’s policy does.

It’s important to note that these policies differ considerably depending on the insurer. Besides protecting your business property, most policies compensate you for the loss of vital records and papers.

Some will even pay for the revenue you lose in the event fire or other disaster damages your home badly. They’ll also pay for the additional expense of running your business from a temporary location.

Some in-home policies typically include wider liability insurance for higher coverage amounts. They may provide protection against lawsuits for injuries sustained from the services or products you offer.

You can purchase these policies from specialty insurers and homeowners insurance firms that offer them as stand-alone policies. This implies that you can buy your homeowners insurance elsewhere.

Business Owner’s Policy

This policy is specifically for small-to-mid-size businesses and is ideal for a home-based business that operates in different locations.

A business owner’s policy or BOP covers data loss, common business errors/liability and omissions customized to your business and off-premises merchandise liability in the event you lose your delivery in transit.

It will reimburse you for income loss for up to a year if robbery or fire hinders the usual business. Furthermore, if clients visit your premises, they’ll have protection in the event of accidents.

Bear in mind that this policy doesn’t comprise workers compensation, disability or health insurance. You’ll also discover the cost of this policy differs based on the nature of your business and its location.

You may want to consider this policy if you stock manufacture products, inventory, or are at high risk for professional liability.

Final Thoughts

If you operate a home-based business, it’s vital you recognize that your existing contents and home insurance may not offer coverage for your business activities or clients in case of an illness or accident.  Nevertheless, these options will help you select the most appropriate coverage for your business.

Image: Flickr

---