Many home-based business owners assume their homeowners’ insurance policies cover their business needs when something unexpected happens, but unfortunately that’s not necessarily the case.
Typically, a homeowners or a personal umbrella policy doesn’t provide coverage for incidents that take place while conducting business. Coverage for anything business-related – such as your home office, samples, paperwork, computer equipment, data, etc. – is usually excluded from your homeowners policy or only covered up to a low limit.
Also note that most homeowners’ policies don’t cover lost data, lost income or liability. Let’s say an accidental fire destroyed your inventory or someone broke into your home and stole your computer equipment. Maybe a power outage caused a loss of data. Without the proper coverage, you may face a significant loss.
Read your homeowners insurance policy or talk to your agent to find out what’s covered and what’s not covered. Here are some signs you may need additional coverage:
- Your homeowners’ policy limits coverage of business equipment.
- You keep business data (whether on a computer or on paper) stored at home.
- You work from home regularly.
- You have employees, business contacts or clients/customers that visit your home or you do business at their homes.
Home-based business owners typically have two types of business insurance to consider:
- Rider to a homeowners or renters insurance policy. This low-cost option generally provides limited additional coverage. This may be a good option for a one-person business with limited liability exposure and a minimal amount of valuable equipment.
- Business owners’ policy. This is a more comprehensive option that protects against unexpected business interruption, damage to data or equipment, and liability or malpractice claims.
Other Considerations
Does your business require you to drive? In that case, you may need a separate business auto policy. Your personal auto policy does not necessarily offer coverage if you’re in an accident while visiting clients or making deliveries.
Do you have employees working for you? If so, workers’ compensation coverage may be needed.
If you have questions on whether you have the right coverage for your home business, please give us a call to go over your options.
