Does Your Home Based Business Have Enough Coverage?


If you think your homeowner’s policy has got you covered, think again.

Today’s technology and mobile devices allow many entrepreneurs are able to work from their homes. If you’re one of them, have you thought about whether or not you have enough insurance to cover your business if something unexpected happens? If you’re like many home-based business owners, you may be under the impression that your homeowner’s policy will cover you, but that’s not always the case. In fact, studies show that more than 60% of home-based businesses do not have adequate business insurance. Here’s some common misconceptions and a look at the policies you should consider if you’re running a business from home:

My homeowner’s insurance is enough

While there are some policies that will cover losses for a home business, many do not. Some homeowner’s policies actually have specific exclusions against home businesses, so check your policy and ask your provider if you are unsure. If your homeowner’s policy is like most, it will not cover you when something unforeseen happens like your computer or your product is stolen in a robbery, you have a fire in your house and all of your office equipment is destroyed, or someone delivering a business package is injured on your property.

What coverage is best?

1. Rider

If you are tight on funds (as many small businesses are), you can look into adding coverage to your existing homeowner’s policy. A rider can expand your coverage to include damages to your business equipment, but this option is the least expensive for a reason, it usually doesn’t offer a large amount of coverage.

2. In-Home Business Policy

An In-Home Business Policy is a cost effective option that can give you coverage up to about $10,000, depending on your insurance provider and policy. Usually, general liability is included in these policies and it will cover you if there’s an interruption in your business because of damage to your home. In-Home Business policies also offer a limited amount of coverage for loss of data, documents or in the event that you are working offsite and something happens to your equipment or product.

3. Business owner’s policy

For the most comprehensive coverage, it’s recommended that those who own and operate a business from their home invest in a business owner’s policy. It will cover you in a variety of situations like loss of data or documents, theft, damage to business equipment, liability if someone is injured, loss of income or business interruption if there’s a disaster or storm. The benefit to this policy is that you can get a larger amount of coverage.

More to think about

Bundle it up
Because the popularity of home-businesses is on the rise, some insurance providers will offer bundles that include coverage for your home and your business in one. They include things like coverage for business equipment and liability coverage. These types of all-in-one policies can be less expensive than their separate counterparts and are worth looking into depending on the type of business you’re operating.

Value versus cost of replacement

Many insurance policies are written to cover only the value of your equipment, furniture, etc. When you’re ready to purchase a business policy, be sure to ask about coverage that provides the cost of replacement instead. This is important because most of your computers and other equipment have likely gone up in price since you first bought them and the cost to replace everything would be far more expensive in today’s market.
If you’re running a business from your home and are thinking you may be underinsured, be sure to review all of these policies and coverages and find out which one is suitable for you. We’re here to answer any questions you have and to help you get the coverage you need to protect yourself and your business.