More than 43 million Americans operate full- or part-time businesses from their homes, and more are on the way as technology gradually reduces the need for and/or size of separate facilities for many types of enterprises. Along with shedding leases, commuting, and other costs of “conventional” business operations, many home-based entrepreneurs also assume their homeowner’s insurance policy provides the protection they need.
This is not always true. According to the Independent Insurance Agents and Brokers of America, Inc., homeowner’s policies were never intended to cover business exposures. Typically, these policies limit coverage for items used in a business (e.g., computers, fax machines, filing cabinets, tools and inventory, etc.) to $2,500 in your home and $250 away from home.
What’s more, a homeowners policy provides no liability insurance for your home-based business, nor does it provide business interruption protection in the event that fire, major storm, or other situation causes your business to cease operations temporarily or permanently.
Fortunately, home-based businesses have several options for bridging insurance gaps. They include:
- Incidental Business Endorsement. Depending on your business, you may be able to attach this endorsement to your existing homeowner’s policy to cover on-premises structures or equipment that you use for business. This endorsement can also be tailored to include business liability.
- Business Owners Package Policy. If your in-home business does not qualify for an incidental business endorsement, you can purchase coverage under a business owner’s package policy (BOP), which provides property and liability coverage.
- In-Home Business Owners Policy. Some insurance companies offer policies that combine homeowners and business owner’s coverage into a single policy that provides both business coverage (business liability, replacement of lost income) and homeowner’s coverage for fire, theft, and personal liability. These policies eliminate gaps and duplications in coverage, and the rates reflect the in-home status of your business.
- Vehicle Policy. If you have a personal vehicle that’s sometimes used for business or if your in-home business is the owner of one or more vehicles, you may need to purchase a Personal or Commercial Automobile Policy.
An independent insurance agent can help identify risk areas and provide guidance for finding the appropriate coverage to protect your business, as well as you and your family. More information is available at www.independentagent.com or www.TrustedChoice.com.
Another great source for small business expertise is SCORE “For the Life of Your Business.” SCORE is a non-profit organization of more than 12,000 volunteers who provide free, confidential business mentoring and training workshops to small business owners.
To learn more about the local chapter of SCORE, visit www.MidFlorida.score.org.