If you run a business from your home or store business assets at your home, you probably know that your home insurance already has some coverage for your business. But, there can be some big dangers to relying on a home policy when it comes to covering accidents or mishaps. To better understand where your coverage gaps are, or if you have the kind of protection you need, you should talk to an independent insurance agent.
An independent insurance agent can provide accurate and unbiased advice to help you make the best decision for a business property at your home.
Why Your Home Business Property Needs Protection
Unless you bought a specialized policy, most homeowners policies only offer a limited amount of protection for a business property at your residence. These gaps in coverage for professional liability and your business assets can be substantial, which increases the risk that your business may be vulnerable to theft, fire damage, and more.
Consider the following when choosing a type of insurance policy for your home-based business:
- Business equipment: Do you keep business equipment, inventory, and supplies at your home? If so, you should know that homeowners policies typically limit coverage to only personal belongings. Business items, merchandise, and products strictly related to the business generally require a separate form of insurance coverage.
- Business documents: Business documents aren’t usually covered under a regular homeowners policy. This includes such items as client lists or financial records, which require their own separate coverage.
- Work-related liability: If you have a separate office but perform work-related tasks regularly from home, a homeowners policy won't cover work-related incidents that occur at your house, such as an employee being injured in your garage.
These are just a few of the missing coverages that require separate types of insurance policies. In every case, a catastrophic loss at your home can be a serious blow to your business. For example, if a fire breaks out at your home, you can lose work-related equipment, valuable financial records, and injure an employee.
What Are the Most Common Insurance Options for a Home Business?
Just as no two businesses are exactly alike, finding a one-size-fits-all insurance policy that protects your business property at home isn’t an option.
Instead, you’ll want to work with an independent insurance agent who can evaluate your unique needs and recommend policies that encompass your needs. An independent insurance agent can help you calculate the cost of replacing your business documents, belongings, equipment, and so forth in the event that you file a claim.
There are a number of common insurance options that are used to insure a home-based business. These include:
- Rider to a homeowners policy
- Business property coverage
- In-home business policy
- Additional liability coverage
- Business owners policy (BOP)
Homeowners Policy Rider
For those looking for a small boost in protection, your home-based business may benefit from the most inexpensive form of business coverage. By purchasing an add-on, or a rider, you can expand coverage without a significant increase in premiums. Getting $2,500 to $5,000 worth of coverage is generally very affordable for home businesses that rarely have visitors and relatively inexpensive equipment. It’s important to note that business liability coverage usually has to be purchased separately.
Business Property Coverage
For more coverage than a rider, you may want to look for business property coverage to protect business supplies stored at your home. With larger coverage limits closer to $10,000, adding this to your homeowners policy can protect your inventory that’s temporarily stored at home before it’s being prepared to be sold or delivered to customers.
Be aware that business property coverage may not extend to certain types of equipment or businesses, or the manner of storage. For instance, many insurers don’t offer coverage for computer equipment. Also, some policies may exclude coverage for items stored in a structure other than the home, such as in a detached garage or barn.
In-Home Business Policy
For small home businesses, an in-home business policy might be the right level of coverage for you. In-home business policies usually cover injury and theft for up to three employees, with premiums between $250 and $500 per year on average for up to $10,000 in losses.
Because the scope of an in-home business policy is less than full-fledged commercial policies or a BOP (see below), there are a few limits of coverage that need to be understood. For example, this type of policy offers some liability protection for injury, but doesn't typically provide errors and omissions (E&O) coverage which may be important for businesses, such as legal work and notary services.
Additional Liability Coverage
Because your homeowners insurance policy's liability coverage will probably not extend to business activities, purchasing additional liability coverage is a smart decision for at-home businesses. Talk with an independent agent to learn about liability coverage limits, exemptions, and which companies offer the broadest protection at the best rates.
Business Owners Policy (BOP)
The most comprehensive form of coverage for your home-based business is known as a business owners policy. Commonly referred to as a BOP, a business owners policy provides home business owners more than $10,000 worth of coverage in a package of related policies. These policies are the best option for those who need specific business coverage and may not have been eligible for optional business property or in-home business coverage.
Most BOPs include:
- Loss or damage to business assets, equipment, and documents
- Professional liability coverage
- Liability for employee/contractor, such as workers' comp insurance
- Loss of income or business interruption protection
- Automobile insurance, and in some instances, coverage for when driving a personal car for business
When speaking with an independent insurance agent, be sure to ask about each option and how it relates to your situation. For instance, an independent insurance agent can offer ways to get lower premiums by bundling your policies with your preexisting coverages.
If you have questions about what your homeowners insurance policy covers, or you want to discuss whether additional coverage may better protect your business, an independent agent can help you choose the coverage that fits your business needs.
How to Find the Best Coverage for Your Business Property at Home
Insurance can be complex, and searching through options can be confusing, time-consuming, and frustrating. An independent insurance agent's role is to simplify the process.
When it comes time to purchase insurance or add extra coverage, they’ll break down all the jargon and explain the nitty-gritty so you understand exactly what you're getting.
And should you need to file a claim, you’re not alone. Your agent will be right there to help guide you through every last step and get your life back to where it all was. How great is that?
Why Online Quotes Aren’t Always the Best Way to Shop
Getting your insurance quotes online can be tempting. Sure, it’s fast and easy, but are the quotes you are getting actually accurate? And are you getting quotes for all the different types of coverage your business needs?
Online quotes cannot give you the whole picture. They often omit important coverage, which may result in you being unable to get compensation if something disastrous happens. And they can leave out cost-saving opportunities such as discounts and bundling opportunities that an independent agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent near you, and schedule a one-on-one consultation to discuss your options for the best coverage for your business property.
The Benefits of an Independent Insurance Agent
Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility, and competitive pricing while working for you. Find an independent insurance agent in your community here.
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