Starting A Home Business? Make Sure You Get The Right Insurance Coverage

If you are planning on starting a business out of your home, you may need to update your homeowner's insurance policy. Homeowner's insurance is a necessity if you own a home, but adding a home-based business can affect the rates you pay. In addition, you will want to make sure your new business has enough insurance coverage, and this may require modifying your current policy. Here are several things you should know about insurance and a home business.

Your Current Policy May Offer Some Protection

The homeowner's insurance policy you currently have may offer some insurance protection over your business, but this coverage is probably not enough. A typical homeowner's insurance policy provides up to $2,500 in coverage for business assets. If your business has assets that are valued at an amount greater than this, your current policy will not be sufficient.

Unfortunately, many people that run small businesses out of their homes do not realize this, and that is why approximately 60% of home businesses are underinsured. If you do not have enough insurance and something happened to your home, you could get hit hard financially.

Your Homeowner's Insurance Policy Lacks The Right Coverage

Even if your current homeowner's insurance policy offers enough protection for the business assets you currently own, it probably does not offer liability protection for your business. Liability protection is a type of insurance coverage designed to cover accidents that may take place on your property.

For example, if a supplier brings boxes of goods to your home and falls on your driveway, he or she could sue you for the injuries. Because this delivery was for your business, your current homeowner's insurance policy would probably not cover the incident. This means you would be stuck paying the damages out of your own pocket. This is another reason it is important to look into business insurance for your home-based business.

There Are Several Options You Can Choose From

If you are worried about not having enough coverage, the best thing you can do is talk to an insurance agent about home-based business coverage. Depending on the type of business you have, your agent might be able to offer several different options to you. Here are some of the options available for home businesses:

  • In-home policy – The first option you have is called an in-home policy, and this option gives your coverage for your business property and liability. Typically, an in-home policy will only offer a limited amount of coverage for business assets, which is often around $10,000. In addition, this type of policy will usually cover lost income if you cannot work due to damage of your home.
  • Business owner's policy (BOP) – A BOP plan is usually more expensive than an in-home policy, but it also offers more protection. This plan not only offers the same types of coverage as an in-home policy, but it also protects work done outside of the home.
  • Umbrella policies – You could always add an umbrella policy to the business coverage you purchase. An umbrella policy offers additional insurance protection you cannot get with one of the other types of home business insurance policies.

Every home-based business is different, and that is why you should talk to an agent before choosing an insurance plan. Your agent will be able to help you determine your exact needs along with a policy that would give you all the protection you need.

Having enough insurance coverage is important for every aspect in life, including when you open a business out of your home. To learn more, contact an insurance company that sells homeowner's insurance for home businesses.