According to the Small Business Administration, more than half of all U.S. businesses are based out of an owner’s home. Just as with any other business, you want to be sure your home-based operation is properly protected from the unexpected. You have a quality homeowners policy so you’ll be covered, right? Not necessarily. Home-based businesses might not be covered through your homeowners insurance policy.
Many homeowners policies have a limited amount of coverage for business equipment – so if you have damage beyond that limit you’d be paying out of pocket. And they often don’t have any coverage for liability or lost income. Additionally, some homeowners policies specifically exclude coverage for home-based business.
Do you maintain business data at home – such as client or employee records? Do clients or employees come to your house? Are supplies and/or inventory kept at home? These are all signs that you might not have adequate protection for your business.
Review your homeowners policy in detail and talk with your advisor to understand what your current policy does and does not cover. You may need to consider additional insurance options to protect your home-based business.
Adding To Your Homeowners Policy
Depending on the nature of your business, you may be able to add an endorsement to your homeowners policy to increase the coverage for business equipment and purchase a homeowners liability endorsement. This solution will not provide sufficient coverage for all home-based businesses.
Business Insurance Coverages
For more comprehensive coverage, you should look towards solutions such as the following. This list is not all inclusive. Consult your advisor to find the best option for your business and your needs.
- General Liability Policy –This policy would protect you if you are sued for negligence, faulty product, or personal injury. It is well-suited for those who don’t have inventory at home or other offsite locations, but are looking for a basic liability coverage.
- Business Owner’s Policy – This policy would cover structures on your property where your home-based business operates. It can also cover damage done to inventory or loss of income. A standard business owner’s policy will combine property and liability coverage.
- Business Owner’s Policy with Endorsements – You can customize your coverage with endorsements to your home-based business policy that are specific to your individual business needs.
Don’t assume your homeowners insurance policy will provide sufficient coverage for your home-based business. Review your policy and consult your advisor to ensure you’re properly protected from worst-case scenarios!