Do you run your own business out of your home? What exactly is a home business and how does it affect you and your homeowner’s policy? A Home-Based Business is a business whose primary office is in the owner’s home. The business can be any size or any type as long as the office itself is located in a home according to Enterpreneur.com.
Most often, a homeowner’s policy may not provide sufficient coverage for your home business. For example, the Insurance Information Institute states that a standard homeowners policy provides only $2,500 coverage for business equipment. Furthermore, a homeowners insurance policy often does not extend liability coverage for home business activities or provide any coverage for lost income either. What if my homeowner’s policy does cover my home business? For some insurance companies, an endorsement may be added to your existing homeowner’s policy to provide coverage for your home-based business. Secondly, some insurance carriers may also provide a homeowners liability insurance policy. This policy kicks in to provide coverage for clients or delivery people who may get hurt or injured as it pertains to your business-related activities.
In other situations, depending upon what type of home-based business you are operating, some insurance companies will require you to obtain a separate business owners insurance policy. Consider asking yourself these important questions below about your home business:
- Do customers come to my house? Could I afford to take on the risks and financial burden if someone gets hurt at my home business?
- Do I keep an inventory or supplies in my home?
- Would I lose income if I had to close my business because of damage to my home? Do I have another source of income if my home is damaged or if I get injured?
- Do I have employees working in or outside of my home?
- Do I maintain client or employee records on my personal computer?
If you answered mostly yes or are unsure of where your home-based business stands, it is important to reach out to your independent agent to discuss what coverages or additional policies you may need. Also, having an independent agent can help you review your homeowner’s insurance policy to check if there are any “business property” restrictions such as, if you store customer data and encounter a data breach or sensitive work-related documents are stolen, a homeowners insurance policy may restrict coverage whereas a business owners policy would keep your business protected.
Contact Paroubek Insurance Agency to learn about the risks and coverages you face with a home-based business.