How do I insure my home business?
If you're running a business from your home, you may not have enough
insurance to protect your business equipment. A typical homeowners
policy provides only $2,500 coverage for business equipment, which
is usually not enough to cover all of your business property. You
may also need coverage for liability and lost income. Insurance
companies differ considerably in the types of business operations
they will cover under the various options they offer. So it's wise
to shop around for coverage options as well as price.
Regardless of the type of policy you choose, if you're a professional
working out of your home, you probably need professional liability
insurance. Some types of in-home businesses, such as those that
make or sell food products or sell home-made personal care products,
may have to buy special policies.
To insure your business, you have three basic choices, depending
on the nature of your business and the insurance company you buy
it from. They are:
- Homeowners Policy Endorsement.
You may be able to add a simple endorsement to your existing homeowners
policy to double your standard coverage for business equipment
such as computers. For as little as $25 you can raise the policy
limits from $2,500 to $5,000. Some insurance companies will allow
you to increase your coverage up to $10,000 in increments of $2,500.
You can also buy a homeowners liability endorsement. You need
liability coverage in case clients or delivery people get hurt
on your premises. They may trip and fall down your front steps,
for example, and sue you for failure to keep the steps in a safe
condition.
The homeowners liability endorsement is typically available only
to businesses that have few business-related visitors, such as
writers. But some insurers will provide this kind of endorsement
to piano teachers, for example, depending on the number of students.
These endorsements are available in most states.
- In-Home Business Policy/Program.
An in-home business policy provides more comprehensive coverage
for business equipment and liability than a homeowners policy
endorsement. These policies, which may also be called in-home
business endorsements, vary significantly depending on the insurer.
In addition to protection for your business property, most policies
reimburse you for the loss of important papers and records, accounts
receivable and off-site business property. Some will pay for the
income you lose (business interruption) in the event your home
is so badly damaged by a fire or other disaster that it can't
be used for a while. They'll also pay for the extra expense of
operating out of a temporary location.
Some in-home business policies allow a certain number of full-time
employees, generally up to three.
In-home business policies generally include broader liability
insurance for higher amounts of coverage. They may offer protection
against lawsuits for injuries caused by the products or services
you offer, for example.
In-home business policies are available from homeowners insurance
companies and specialty insurers that sell stand-alone in-home
business policies. This means that you don't have to purchase
your homeowners insurance from them.
- Businessowners Policy (BOP).
Created specifically for small-to-mid-size businesses, this policy
is an excellent solution if your home-based business operates
in more than one location. A BOP, like the in-home business policy,
covers business property and equipment, loss of income, extra
expense and liability. However, these coverages are on a much
broader scale than the in-home business policy.
A BOP doesn't include workers compensation, health or disability
insurance. If you have employees, you'll need separate policies
for these coverages.
- Automobile Coverage.
If you are using your car for business activities -- transporting
supplies or products or visiting customers -- you need to
make certain that your automobile insurance will protect you
from accidents that may occur while you're on business. Contact
your home or auto insurer.
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Information Institute, Inc. - ALL RIGHTS RESERVED -
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