home business insurance: what coverage do i need?

When it comes to insuring your at-home business, it's not always about protecting the money you make, but securing your liability and assets, too. Depending on the type and scale of your company, there are a number of great options for protecting it.

why your home business needs protection

Chances are your home policy doesn't provide the necessary coverage to insure your home business, with gaps in coverage for professional liability and your business assets. In addition to reading through your home policy and talking with your insurer, here are some things to consider when choosing a type of coverage for your business.

Business equipment

Does your business require its own equipment? Do you have inventory and supplies for work? If so, you'll likely need a separate form of coverage. A homeowners policy typically limits coverage to personal belongings, not personal business items, products, or merchandise strictly related to the business.

Valuable documents

Much like business equipment, business documents aren't typically covered under your regular homeowners policy. So if your business requires protection for any intellectual property kept in your home, like client lists or financial records, you probably need separate coverage.

Work-related liability

If you have a separate office but regularly work from home, your homeowners policy likely won't cover work-related incidents that occur at your house (say an employee is injured).

3 common insurance options for a home business

Much like with your regular homeowners policy, it helps to calculate what it would cost to replace all of your business's belongings, documents, equipment — all things you'd need your insurer to reimburse you for in the event of a claim.

Common types of business protection include:

In-home business policy

If you have a small home business, an in-home policy might provide the right level of coverage for you. In-home policies typically cover injury and theft for up to 3 employees. Plus, in-home policies are generally affordable (between $250 and $500 per year on average) and can potentially cover up to $10,000 in losses.

This type of plan offers some liability protection for injury, but doesn't typically provide errors and omissions (E&O) coverage, which offers protection against third party claims of professional misrepresentation or mistake). You'll most likely need to purchase E&O insurance separately if you provide services to clients for a fee and could be sued for negligence.

Business owners policy

Commonly referred to as a BOP, a business owners policy is essential for home business owners who need more than $10,000 worth of coverage. It's one of the most comprehensive packages available for larger at-home business operations and can cost as little as $42 a month on average.

The coverage provided by a BOP typically includes loss or damage to business assets, documents, and equipment; professional liability, and liability for employee/contractor or customer injuries; and loss of income or business interruption protection in the event of a power outage or other covered risk. And in some cases, a BOP might even cover you when driving a personal car for business.

Generally, a BOP covers a much higher amount of loss than an in-home business policy or home policy rider. It's especially helpful if your business operates out of more than one location.

Rider to a home policy

If you're a one-person operation, your business might benefit from the most inexpensive form of business coverage: an add-on, or rider, that expands your regular home policy to protect your business.

If you rarely host business-related visitors and don't have much valuable business equipment, a rider to your regular home policy could be a cost-effective option. Plus, $2,500 to $5,000 worth of coverage is generally very affordable.

However, if, say, a delivery person gets hurt carrying business materials into your home, you're not covered by your regular home policy. Business liability protection usually has to be purchased separately.

getting coverage for your home business

Whether you sell quilts online or run a small consulting firm from your home, it's essential that you get good coverage. Select the specific protection you need by getting a free business insurance quote.

Homeowners insurance
Now that you have a better idea of which type of protection is right for your home business, make sure you've got home coverage to complement it.

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Get a free business insurance quote for reliable coverage.

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