Home Based Business Insurance
If you are working at home - STOP - and review your insurance coverage right away.
Your homeowners insurance probably doesn't provide insurance to properly cover your business.
A typical homeowners policy provides only $2,500 coverage for business equipment which is usually not sufficient to cover
all of your business property. More importantly, you will also need coverage for liability and
business interruption.
To insure your business, you have three choices--endorsements to the
homeowners policy, an in-home business policy or a small businessowners
package policy.
1 ENDORSEMENTS
Depending on the type of business you operate, you may be able to add
an endorsement to your existing homeowners policy. For as
little as $14 a year, you can double your standard homeowners
policy limits for business equipment from $2,500 to $5,000.
Some companies have begun offering endorsements that include property
and limited business liability coverage. Endorsements are
typically only available for businesses that generate $5,000
or less in annual receipts. They are available in most states.
2 IN-HOME BUSINESS POLICY
The insurance industry has responded to the growing number of home-based
businesses by creating in-home business insurance policies.
For about $200 per year you can insure your business property
for $10,000. General liability coverage is also included in
the policy. A business owner can purchase anywhere from $300,000
to $1 million worth of liability coverage. The cost of the
liability coverage will depend on the amount purchased.
If your business is unable to operate because of damage to your house,
your in-home business policy will cover lost income and ongoing
expenses such as payroll for up to one year. The policy also
provides limited coverage for loss of valuable papers and
records, accounts receivable, off-site business property and
use of equipment.
In some cases, the companies that offer these policies require that
you purchase your homeowners and auto policies from them.
3 BUSINESSOWNERS PACKAGE POLICY (BOP)
Created specifically for small businesses, this policy is an excellent
solution if your home-based business operates in more than
one location or manufactures products outside the workplace.
A BOP, like the in-home business policy, covers business property
and equipment, loss of income and extra expenses, and liability.
However, these coverages are on a much broader scale than
the in-home business policy.
AUTOMOBILE COVERAGE
If you are using your automobile for business activities--transporting
supplies or products or visiting customers--you need to make
certain that your automobile insurance will protect you from
accidents which may occur while on business.
In order
to get insurance coverage that will not overlap with your
homeowners policy or leave any exposures, you should consult
with an insurance professional with experience in this field.
To find an expert, contact your home insurer, other professionals
with similar businesses or other home business owners.
Source cited: Insurance Information Institute
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