Listen up, especially if you run a business from your home: About 60% of home-based businesses lack adequate coverage, according to a survey from the Independent Insurance Agents & Brokers of America. Don’t be part of that 60%.
Here’s why it matters. What if a deliveryman slips and falls on your front step while delivering parts for an order? What a child gets hurt at a home daycare? In either scenario, the business owner could find his or her finances on the line because of a lawsuit. Many home-based business owners leave their livelihoods to chance because they believe their ventures are covered under their home insurance policy – a big misconception. A typical homeowner’s policy, for example, provides only $2,500 coverage for business equipment, which is usually not enough to cover everything a business owner might use. Additionally, the homeowners policy won’t provide any coverage for liability issues associated with the venture.
If you work from home or own a home-based business, keep the following are three basic options for insurance coverage in mind.
Homeowners policy endorsement
Some home-based businesses just require a little extra coverage. In this case, owners can add an endorsement to their standard homeowners policy to cover their business. A homeowners policy endorsement will usually provide about $2,500 of additional equipment coverage. This is a great option for freelance writers or other one-person based businesses without a lot of valuable equipment or many business-related visitors.
Even with this option, business owners may also want to ask about a homeowners liability endorsement to extend coverage to the business. You know, just in case you have a clumsy delivery guy.
In-home business policy
This type of policy provides more comprehensive coverage for business equipment and liability than a homeowners policy endorsement. An in-home policy often covers loss of critical documents and loss of income in the event that your home is damaged and unusable, and it typically covers against injury or theft for up to three employees.
These plans usually cover as much as $10,000 in losses. This option should be considered by most serious home-based businesses, especially those that have customers or clients coming in and out.
Business owner’s policy
If you need more than $10,000 of coverage, then a business owner’s policy could be right for you. This type of policy is created specifically for small to midsize businesses, and it’s a good idea if your business operates in more than one location. This policy offers similar coverages to the in-home policy but on a much broader scale.
The big takeaway: If you’re serious about your home-based business, don’t leave it without the proper coverage. Your best resource is a licensed insurance agent. Tell the agent about your business, ask questions and create a policy that is right for you.
This article was written by Samantha Alexander, contributor to the HomeInsurance.com Blog. The HomeInsurance.com blog serves as a resource center for insurance consumers and homebuyers across the country. The HomeInsurance.com RateReport offers a bird’s eye view of average home insurance rates across the country.