Home-Based Business: Why You Need a Separate Policy

Business Man In Suit Having Miniature House On Palm Of His HandIf you are running a home-based business, you probably assume that your homeowner’s or renter’s insurance has got you covered. However, homeowner’s and renter’s policies cover very little for business equipment and does not support liability coverage, lost data, or lost income in the workplace if such events occur. What’s even more surprising is that many business-owners based in their homes do not know that. According to the Rocky Mountain Insurance Information Association, the majority of home-based businesses are underinsured.  To insure your business, you have three basic choices, depending on the nature of your business and your insurance provider.

Homeowners Policy Endorsement

An endorsement is a written modification that either adds or takes away one or more provisions of the general policy to serve specific needs. Depending on your insurance provider, you may be able to add a simple endorsement to your existing homeowners or renters policy to increase your standard coverage for business equipment. Some insurance companies will allow you to increase your coverage up to $10,000 in increments of $2,500.

There are over a hundred different types of endorsements for the standard homeowner’s policy, but one of them that you should consider to purchase is a homeowners liability endorsement. You will need this policy in case clients, customers, or delivery people are injured on your premises. This policy includes bodily injury, property damage, and personal injury, but does not include professional liability.

In-Home Business Policy

This policy provides more comprehensive coverage for business equipment and liability than a policy endorsement as mentioned above. Depending on your insurer, this policy not only provides protection to your business property. It will reimburse you for the loss of confidential and important records, accounts receivable and off-site business property, business interruption, and extras expenses such as operating out of a temporary location.

Another great part of this business policy is the fact that it may offer protection against lawsuits for injuries caused by the products or services you offer. Another plus!

Business Owners Policy (BOP)

This policy is specially made for small to mid-sized businesses. It would be extremely wise to purchase this policy. A BOP covers property insurance for buildings and contents owned by the company, business interruption, and liability protection. However, a BOP does not cover worker’s compensation, health/disability insurance, auto insurance, and professional liability. You’ll need separate insurance policies to cover professional services, vehicles, and your employees.

The type of coverage you need depends on several factors including what kind of business you operate.  Regardless of the type of policy you choose, if you’re a professional working out of your home, you will need to purchase some type of insurance to protect your home-based business. At TJ Woods, our skilled team of expert agents will help you figure out which policies would be best to help protect you and your business. Contact us so we can start helping you today!