Is My Home Based Business Covered Under My Home Insurance Policy?

20 Sep
Home Based Business Insurance

Statistics show that a new home-based business is started every 12 seconds and that there are currently 38 million of them in America.

Home-based businesses have grown more and more popular over the past several years. Statistics show that a new home-based business is started every 12 seconds and that there are currently 38 million of them in America. These businesses generate $427 billion every year and while working from home is a dream for many people, it can leave gaps in your insurance coverage. Knowing the coverage limits of your homeowners policy is of the upmost importance when you are running a business out of your house.

Its time to clear a few hours off your schedule and get out your insurance policy for a review. In the majority of situations, your homeowners insurance policy will not cover your home-based business. Most policies provide coverage up to $2,500 for business equipment and that will usually not be near enough protection. In addition to protecting your equipment, you should consider your liability and business interruption needs.

As a home-based business owner there are three options available to you in order to protect your business, your home and your family:

Endorsements on Current Homeowners Policy

If you are running a fairly small business out of your home, it may be possible to simply add an endorsement to your current homeowners policy. A small bump in your premium could double your policy limits for business equipment to $5,000. Unfortunately, this still leaves a gap in your liability coverage.

Some insurers have jumped into the home-based business insurance market and are offering a low priced endorsement that ups your business property coverage while also offering limited liability insurance. These types of endorsements, which are available in most states, are usually only available for business that generate less than $5,000 a year in sales.

Home Based Business Insurance Policy

As the number of home-based businesses has grown, the insurance industry has expanded their offerings in the market. These stand alone policies offer business property coverage of up to $10,000 as well as liability coverage. It is possible to purchase liability protection in amounts that range from $300,000 up to a

$1 million. These policies are very affordable and the price will vary depending on the coverage levels chosen.

Other protections are included as well. Lost income may be covered if damage to your home makes it impossible to operate your business. It will cover expenses such as ongoing expenses and payroll for up to a year in the event of serious damage to your home. When shopping for these types of polices be sure to have a complete understanding of what is covered.

Business Owner’s Insurance

A home-based business that has grown into a larger enterprise may need to consider a business owners package. These policies are excellent for a business that has more than one location or manufactures a product outside of the home or workplace. These policies offer the following coverages: business property and equipment, loss of income and extra expenses, as well as liability. The scope of coverage is much broader on these policies.

Automobile Coverage

If your personal car is being used in a business capacity you may need to review your car insurance as well. Transporting supplies, products or visiting customers could all fall under uncovered activities. The majority of personal car insurance policies have exclusions that prohibit these types of activities.

It is a good idea to contact your insurance agent to verify coverage. Depending on how you use your vehicle you may need to purchase a commercial car insurance policy. There is nothing worse than getting into an accident while out on a delivery for your small business and then learning that your vehicle is not covered. It can end up being an expensive mistake.

A home-based business can be a great way to make a living but making sure you are properly covered is key to your success. Take the time to review your coverage and fill in any gaps you find.

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