According to the US Small Business Administration (SBA), there are currently about 30 million small businesses operating in the United States. Of these, about half are run out of people’s homes.
If you are among the nearly 15 million Americans who owns a home-based business, you may benefit from the protections of home business insurance. For more information and to start comparing customized quotes for coverage, you can contact a local independent insurance agent.
Doesn’t Homeowners Insurance Cover Home-Based Businesses in Arizona?
In a survey of home-based business owners conducted by the National Association of Insurance Commissioners (NAIC), 48% stated that they depended on their homeowners insurance to protect their businesses.
While it is true that your homeowners insurance can provide your in-home business with a modicum of coverage, this coverage is usually very limited when it comes to business property coverage, and often will not cover business liability claims at all.
Most home insurance policies have limits of around $2,500 for your business property if it is lost or damaged. Additionally, these policies are unlikely to cover your business equipment when it is away from your home.
What Is Home-Based Business Insurance?
Home business insurance is customized coverage specifically designed to cover your in-home business for the things that your homeowners insurance cannot.
A typical policy will include general liability insurance and enough commercial property insurance to cover your business assets such as computer, furniture, equipment, and inventory.
What Kinds of Arizona Home-Based Businesses Need Insurance?
Not every home-based business needs the coverage of a business insurance policy. For instance, a self-employed writer whose business assets include a desk, a computer, and a filing cabinet is likely to have enough coverage through their homeowners insurance.
Some businesses, however, need the added coverage that home business insurance can provide. This may pertain to you if your business has the following.
- More than $3,000 worth of business assets
- Clients coming into your home
- The potential to be sued
Some examples of Arizona home-based businesses that typically purchase business insurance include the following.
- Daycare providers: If a child is severely injured while in the care of an in-home daycare provider, they could be sued and their homeowners insurance is not likely to cover it. That is why the Department of Health and Human Services in Arizona requires liability coverage for in-home care providers in order for them to licensed to care for children.
- Photographers: Many photographers work both off-site and in a home studio and typically have a lot of very expensive equipment including cameras, lenses, lights, and props. Additionally, this type of business carries with it a few liability risks such as if negatives are damaged and a special day like a wedding does not have any professional photographs to commemorate it.
- Multi-level marketing businesses: People who get involved in selling products through MLMs often purchase and store a large inventory of products and samples in their homes. If the value of these items exceeds what their home insurance policy will cover in the event of a theft or disaster, they may want to consider adding a policy endorsement to their homeowners coverage.
If you are uncertain whether you need additional coverage for your home-based business, you can talk to one of the many independent insurance agents in Arizona for obligation-free advice.
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What Are the Different Ways I Can Cover My Home Business in Arizona?
Depending on the type of in-home business you own, you can cover it in three different ways, listed here from least to most expensive.
- Through a homeowners policy endorsement
- Through an in-home business policy
- Through a business insurance policy package
Let’s take a look at each option in greater detail
Homeowners policy endorsement
Adding a simple home-based business endorsement to your homeowners insurance policy can double, or possibly even triple, the amount of coverage your home insurance can provide for your business property.
If your home-business occasionally has clients coming to your home, you may also be able to add an endorsement for third-party claims if they are injured while on your property for business-related matters.
In-home business policy
This is a step up from a homeowners insurance endorsement but not as comprehensive as an actual business insurance policy package. In home business insurance is a business owners policy (BOP) that can provide your at-home business with sufficient commercial property insurance and general liability insurance. You will also have the option of adding business interruption insurance.
Business insurance policy package
This is ideal for larger businesses that run out of people’s houses, particularly those that have frequently have employees and clients coming in and out of the home.
You can customize your coverage to include every type of coverage your business needs. Typically, this means all the coverage typically found in a business owners policy plus coverage such as the following.
- Errors & omissions insurance: This can cover against liability lawsuits related to professional mistakes.
- Workers' compensation insurance: This is required in Arizona if your business has employees.
- Commercial auto insurance: This may be necessary if your home-based business offers delivery or on-site services. Though you may already be covered by your personal auto insurance, claims may sometimes be denied if it can be shown that you were using your vehicle for business purposes at the time of the accident.
Which method of coverage is best for me?
If you are uncertain about which is the best way to cover your home-based business, a local independent insurance agent can help.
These agents work for you, not for a particular insurance company, so they can offer sound guidance and can ensure that you are getting all the coverage you need at the lowest possible price.
How Much Does Home Business Insurance Cost?
As with any type of business insurance, costs can vary from one business to the next.
Prices can range from as little as $25 a year for a basic business endorsement added to an existing homeowners insurance policy to thousands of dollars for a business owners policy for a home-based company with a lot of expensive assets and high liability risks.
Factors that can influence your cost for coverage include the following.
- The type of coverage you are purchasing (i.e., homeowners policy endorsement, in-home business policy, or a business insurance policy package)
- The value of your business assets
- The crime rate and weather risks in the ZIP code where your business is located
- The type of business you are insuring and its liability risks
- Your claims history and credit score
- The size of your deductible
A local independent agent can help you obtain and compare customized quotes from a few competing insurance companies so you can see how much a home-based business insurance policy will cost you.
How Can I Find the Best Home Business Insurance in Arizona?
When you are looking for a reliable, yet affordable, insurance policy to cover your home-based business, a local independent insurance agent can help. These experienced professionals can provide you with trustworthy advice and knowledgeable guidance so you can be sure you are getting the coverage you need at a reasonable price.
There are more than 400 independent agents in Arizona, so it should be easy to find an insurance agent near you.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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