Running a business out of your home can have many benefits, but it can also lead to some blurred lines, at least from a coverage standpoint. When you’ve got business inventory and other work property stored within the home, you may not be sure which policy, your homeowners or business insurance, covers it. You may also be unsure of whether your home insurance covers damages or theft to business property. The good news is we know, so you don’t have to.
Independent insurance agents know all the ins and outs of home insurance and coverage for business property, too. They know exactly how to get your home-based business or business property stored within the home protected from theft and other disasters. But first, here’s a deep dive into home insurance and business inventory coverage.
Is My Business Inventory Covered at Home?
Typically the answer is yes, to an extent. Standard homeowners insurance policies provide some coverage for business property/equipment/inventory stored within the home, but the limit usually caps at $2,500. This coverage limit may run out fast if you’ve got expensive equipment or inventory stored within the home, such as computers and other electronics. So, while your home insurance provides some coverage, realistically you’ll probably need quite a bit more.
If Something Gets Stolen, Does My Business or Home Policy Cover It?
Actually, either policy would cover it. The real question is which policy you’d want to file a claim through to get reimbursed. Since both your home insurance and business insurance provide protection against business inventory/equipment/property getting stolen from the home, you’d want to consider the following when selecting which policy to file a claim through:
- Deductibles: Since both policies would cover business property getting stolen from your house, you’ll most likely want to choose the policy with the lowest deductible, so you can be reimbursed for a greater percentage of the loss.
- Coverage limits: Standard homeowners policies often come with a $2,500 limit for business property. So depending on what exactly was stolen, you may be well within this limit, or you may easily exceed it and need more coverage. In that case, you’d probably want to file a claim through your business insurance.
If you’re unsure of which policy to go through or what your deductibles or coverage limits are, your independent insurance agent can help review your policies with you and help you choose which would be best to file a claim through.
How Do My Business and Home Insurance Work Together for My Home-Based Business?
When you have a business that’s based at least partially at home, you have a couple of options to get it adequately protected. To provide the best combination of business and home insurance coverage, you’ll want to work with your independent insurance agent to review the following options:
- Homeowners policy endorsements: These endorsements help to increase the coverage limits on homeowners insurance for business property stored within the home. Typically your premium won’t increase that much, and you can bump your home policy’s limits up from $2,500 to $5,000, $10,000, or even higher.
- In-home business policies: This type of policy allows for more comprehensive coverage of your business property than homeowners policy endorsements do. In-home business policies provide reimbursement for important losses including documents, off-site business property, and accounts receivable. Business interruption coverage is also included under certain policies.
- Businessowners policies: This option is ideal for home-based businesses that also operate in multiple locations. These policies provide coverage for business equipment/inventory/property as well as loss of income, liability, and extra expenses. Businessowners policies also provide much broader coverage than in-home business policies.
If you’re unsure of which option would work best for your unique home-based business, your independent insurance agent can help you decide.
What Else Does My Business Insurance Cover?
Aside from protection your property, equipment, and inventory, business insurance provides lots of other important coverage, too. Standard business insurance policies provide these common critical protections:
- Workers’ compensation: Covers financial losses if your employees become ill, get injured, or die from a work-related incident. Coverage is mandatory in most states, depending on company size and the type of work being performed.
- General liability: Covers property damage or injury claims made by a third party.
- Business auto: Covers company vehicles against perils like theft, vandalism, and natural disasters.
- Property insurance: Covers loss of or damage to your physical property, including your office space’s structure. Protected mishaps include fires, storms, and more.
Though these are the basic coverages included in standard business insurance policies, you can always add on more types of coverage to get the full picture of protection.
What Doesn’t My Business Insurance Cover?
Standard business insurance policies have two main perils that are never covered, including flood damage and earthquake damage. Special flood insurance and earth movement policies would be required to protect your business from damages and/or suspended operations caused by these types of disasters.
If your business is located along a coast or other area that’s prone to flooding, your mortgage lender may actually require you to purchase flood insurance. Otherwise, flood insurance is still a really good idea to have if you’re in a flood-prone area. Coverage is only available through the National Flood Insurance Program, which is a part of FEMA. Likewise, if your business is in an area prone to earthquakes, landslides, etc., you’ll want to consider an earth movement policy.
What About Protection for Digital Theft?
Not all theft that occurs in businesses concerns physical property. Many times it’s actually data or information that gets stolen, which can cause major problems for business owners, their employees, and customers/clients. To protect against digital theft and data breaches by hackers, it’s essential for modern business owners to consider adding cyber liability coverage.
Cyber liability insurance covers the loss or theft of sensitive data such as credit card numbers, personal information, etc. Data breaches and money transfer interceptions are also covered. Since much of modern business practices take place electronically, it’s imperative to have adequate protection from a digital standpoint. Your independent insurance agent can help you get set up with all the cyber liability coverage your business needs.
What Other Coverage Add-Ons Should I Consider for My Business?
In addition to protecting your physical property, as a business owner, you’ll want to consider all angles in which coverage could be necessary. Having a business insurance policy that addresses all areas of concern is crucial. There are many common add-on coverages that take care of the most frequent types of business claims.
Optional add-on coverages to business insurance include (but are not limited to):
- Crime insurance: Covers losses due to criminal activity such as theft or fraud. Coverage even applies to employees who steal from the company.
- Business income: Covers the financial loss suffered while a business is closed due to fire damage or other disasters.
- Professional liability: Also known as "errors and omissions insurance," this coverage protects against claims made by clients who have suffered financial loss due to the work they've hired you for. This coverage is crucial for those who offer advice or consulting as part of their services.
- Boiler & machinery: Also known as "equipment insurance," coverage applies to electric equipment in the building (e.g., AC units and boilers) that breaks down due to power surges, etc. Property insurance may cover this stuff, but not always.
Your independent insurance agent can help you brainstorm all the areas in which your business is in need of additional coverage. The more complex your business, the more coverage it’ll require.
Here’s How an Independent Insurance Agent Would Help
When it comes to protecting your home-based business against theft and other perils, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers who specialize in home and business insurance, deliver quotes from a number of different sources and help you walk through them all to find the best blend of coverage and cost.
TrustedChoice.com Article | Reviewed by Paul Martin
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