You might be surprised to learn that your homeowners or renters insurance policies may not automatically cover home-based businesses
Whether you earn your living designing landscape plans in a home office or have a side gig making crafts to sell online, it is essential to have the right home-based business insurance.
Many home-based business owners don’t have the right insurance coverage. What’s worse, some even believe their homeowners coverage automatically extends to their businesses. On the contrary, you need specific insurance for working from home — your homeowner’s insurance won’t cut it.
Here are five things to consider when shopping for insurance for your home-based business.
1. What are the terms of your current insurance?
Read the fine print on your existing policy to see what it covers. Most standard homeowners and renters policies restrict coverage for business assets and activities, and some consider operating a home-based business an issue which could result in cancellation of your insurance coverage.
2. How much coverage do you need?
Different business policies provide different levels of protection. Adding coverage to your existing homeowner’s policy is the least expensive option; it also may provide the least amount of coverage, but it might be suitable for a small business with minimal equipment. For additional protection, consider in-home, business owner or commercial policies that cover extras such as equipment, theft, injuries, loss of inventory, loss of data and more.
3. Is your income protected?
Home business coverage will cover business assets like equipment and inventory but what happens if a fire or theft in your home-based business hampers your ability to earn an income or generate a profit? When disaster strikes, at least 25 percent of affected businesses do not reopen, according to the Insurance Institute for Business & Home Safety. Business interruption insurance can help replace your lost or reduced income.
4. Do clients or employees spend time onsite?
If a client slips and falls during a meeting or an employee gets hurt while working in your home, your existing policy may not cover third-party injury claims. Your agent may recommend business liability insurance and workers’ compensation insurance to protect against accidents and injuries that occur in your home-based business.
5. Do you use your car for business?
You may not be able to claim business-related losses incurred during an auto accident with a standard insurance policy. To protect inventory and supplies that are kept or transported in your vehicle, you might need to adjust your auto insurance policy to cover business use.
Don’t assume your homeowners or renters policy covers your business.
Talk to an agent about insurance for your home-based business and get a policy that offers the right kind of protection.