Today more than 43 million Americans are operating full- or part-time businesses from the comfort of their homes, and these numbers continue to grow every year. One of the secrets to running a successful home-based business is being able to separate your business activity from your home activity.
Whether you spend two hours or 62 hours per week on your at-home endeavor, it remains a business with all the risks and rewards associated with owning a business. To safeguard against the risks, you need to be aware that your homeowners insurance policy offers limited or no protection for your business while it is being operated from your home.
If you rely on your homeowners policy as your only means of insurance protection, you may find your business underinsured or uninsured in the event of a loss.
Homeowners policies were never intended to cover business exposures. Consequently, coverage for the items you use in your business such as computers, fax machines, filing cabinets, tools and inventory are limited to $2,500 in your home and $250 away from home under most policies. And your homeowners coverage provides no liability insurance for your home-based business.
First, let's take a look at what coverage you may need. Insurance coverage generally falls into two categories. This is true of homeowners, auto and most business policies. Those two categories in business terms are:
Of course, every business has its own special requirements. There are many specific insurance coverages available to address the needs of your in-home business.
There are several types of insurance policies available for in-home businesses. They include:
Incidental Business Endorsement--Depending on your business, you may be able to attach an "incidental business endorsement" to your existing homeowners policy which will cover other structures or equipment on your premises that you use for business. This endorsement can also be tailored to include your business liability.
Business Owners Package Policy--If your in-home business does not qualify for coverage under the "incidental business endorsement" you can purchase coverage for your home-based business under a business owners package policy, referred to as a BOP, which provides property and liability coverage.
In-Home Business Owners Policy--Some insurance companies offer policies that combine homeowners and business owners coverage into a single policy, designed specifically for in-home businesses. These policies provide both business coverage such as business liability and replacement of lost income, and homeowners coverages such as fire, theft and personal liability. These policies eliminate gaps and duplications in coverage, and the rates reflect the in-home status of your business. Check with your independent insurance agent to determine which of these coverages is appropriate for your in-home business.
If you have a personal vehicle that you sometimes use for business or if your in-home business is the owner of one or more vehicles, your Trusted Choice® insurance professional can advise you whether you will need to purchase a Personal or Commercial Automobile Policy.
If your in-home business is your full-time occupation, you may need health and life insurance and a retirement plan. In other words, you may need to provide employee benefits to yourself. Some options to consider are:
Remember that in order for any business to be successful it must be run like a business, regardless of its location. A crucial element in business success is the ability to minimize risks which can be accomplished with a comprehensive insurance program. Check with your Trusted Choice® insurance professional for the best business coverage for your in-home business.