Is My Home Business Covered?

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Q: I run a business out of my house. Do I need a separate insurance policy?

I've recently decided to start a home-based business selling cosmetics for a well-known national brand. I'm really excited to get started, but I am taking this seriously as a career and want to make sure I have the appropriate insurance coverage for my needs. Do I need an extra policy of some kind?

A: The answer to this question actually depends on a few different factors, the most important of which are what your specific homeowner's insurance policy offers in terms of business coverage, and what type of business you have. 

While on the surface, all homeowner's insurance policies may seem pretty much the same, but they can have a number of differences. Some policies will offer a bit of coverage for property belonging to home-based businesses, while others may offer nothing. Of the companies that do offer this coverage, the coverage limits may differ significantly. It is very important to keep in mind, however, that this insurance is very limited and not nearly as inclusive as a commercial policy would be. 

The other factor is the type of business you have. If you are doing freelance writing, for example, your business property may consist of a computer and a filing cabinet and your home insurance may provide enough coverage. On the other hand, if you are running a multi-level marketing type business, you may keep thousands of dollars’ worth of inventory in your home, and the limits of what your policy offers may be too low. Then there are businesses that have high liability risks, such as an at-home daycare service. In nearly all cases, these kinds of businesses would need a commercial insurance policy in order to be compliant with state laws. 

The best thing you can do if you are running a business out of your house is to sit down with an independent insurance agent, such as those in our network, and have a lengthy discussion. Your agent can help you determine what hazards your business faces and can explain the many coverage options at your disposal so that your business can be fully protected against financial losses and liability with the right business insurance. These agents can also help you determine how much coverage you currently have with your home insurance and whether or not it is enough.

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