Are you considering starting a business from home? There are some special implications when it comes to insuring a home based business. Although you may not be operating a storefront, your business still has liabilities that may require home business insurance protection.
It is a common misconception that basic homeowners insurance will cover the cost of losses for a home based business. This is not true. The basic policies do not cover the following:
- Losses of business equipment (through theft, damage, or natural disaster)
- Liability on the property, such as injuries to a client or customer
- Medical catastrophes
- Business income loss
These are just a few of the important elements that small business owners deal with in home based settings. Certain types of home based businesses are especially at-risk for the problems listed above. These include, but are not limited, to:
- Real estate agents
- Pet groomers
- Dance and music instructors
- Tutors
- Accountants
- Photographers
- Computer consultants
If you are in one of these service industries, or one that is similar, then it is in your best interest to consider strengthening your home business insurance coverage.
There is more than one way to purchase adequate home business insurance. You can get an add-on to your basic homeowners insurance that will provide more extensive coverage. This is called a homeowners policy endorsement, and it is by far the least expensive way to secure some coverage for your home based business. However, a homeowners policy endorsement will not cover very expensive pieces of business equipment, home business liability or business income.
Another type of coverage you can secure is called an in-home business policy, which features excellent coverage for business equipment, as well as liabilities. There are several different variations of this policy that can be tailored to meet your needs. They are dependent upon the safety features you have put in place, whether or not you have employees working for you, and the nature of your business in general.
The most comprehensive type of insurance for your home based business is called a business owners policy. There are certain size constraints, and the amount of business that is conducted offsite can also influence eligibility for this type of insurance. The business owners policy is all inclusive and covers the cost of property, equipment, business income, and your home business liability. Because the coverage is so extensive, the premiums for this type of insurance are also much higher than the homeowners or in-home business policies.
No matter what type of policy you choose to use for your business, the important thing is that you evaluate your business practices and needs, and take steps to protect them. It might seem like an extra expense, but it is the only way you can protect your home based business in the event that the unthinkable happens. Insurance is important for everything in your life, from your home, to your life and your car. Don’t treat your home based business any differently. Secure a home business insurance policy that will provide adequate protection.
