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Is My Home Based Business Covered Under My Home Insurance Policy?

Running a Home Based Business?

Will you current home insurance and/or auto insurance protect you in your business?

The popularity of home based businesses has been on the rise over the past several years.  Although running your business from your home can be a smart, cost saving decision, it can create costly gaps in your insurance coverage.

If you’re working at home-STOP- and review your insurance coverage. Your homeowners insurance probably doesn’t cover your business. A typical homeowner’s policy provides only $2,500 coverage for business equipment which is usually not enough to cover all of the business property you use in your business. You also need coverage for liability insurance and business interruption.

To insure your business, you have three choices-endorsements to the homeowner’s insurance policy, an in-home business insurance policy or a small business owner’s package insurance policy.

1) ENDORSEMENTS TO YOU CURRENT HOMEOWNERS INSURANCE POLICY
Depending on the type of business you operate, you may be able to add an endorsement to your existing homeowner’s insurance policy. For as little as $14 a year, you can double your standard homeowner’s insurance policy limits for business equipment from $2,500 to $5,000.
Some companies have begun offering endorsement that includes business property insurance and limited business liability insurance coverage. Endorsements are typically only available for business that generates $5,000 or less in annual receipts. They are available in most states.

2) IN-HOME BUSINESS INSURANCE POLICY
The insurance industry has responded to the growing number of home-based business by creating in-home business insurance policies. For under $200 per year in most cases, you can insure your business property for $10,000. General liability insurance coverage is also included in the policy. A business owner can purchase anywhere from $300,000 to $1 million worth of liability insurance coverage. The cost of the liability coverage will depend on the amount purchased.
If your business is unable to operate because of damage to your house, you in-home business policy will cover lost income and ongoing expenses such as payroll for up to one year. The policy also provides limited coverage for loss of valuable papers and records, accounts receivable, off-site business property and use of equipment.
In some cases, the companies that offer these polices require that you purchase your homeowner’s and auto policies from them.

3) BUSINESS OWNER’S PACKAGE INSURANCE POLICY (BOP)

Created specifically for small business, this policy is an excellent solution if your home-based business operates in more than one location or manufactured products outside the workplace. A BOP, like the in-home business policy, covers business property and equipment, loss of income and extra expenses, and liability. However, these coverage’s are on a much broader scale than the in-home business policy.

4) AUTOMOBILE INSURANCE COVERAGE

If you are using your automobile for business activities-transporting supplies or products or visiting customers-you need to make certain that your automobile insurance will protect you from accidents which may occur while on business.  Most personal auto insurance policies either have exclusions or limitations to coverage when engaging in certain business activities, such as delivering goods.  Please check with your insurance agent immediately to verify your insurance coverage.  The last thing you want to happen is to get into an accident while delivering your products and find out that your insurance policy has an exclusion for deliver of goods, leaving you uncovered and personally responsible for paying for the accident damages.

In order to get insurance coverage that will not overlap with your homeowner’s policy or leave any exposures, you should consult with an insurance professional with experience in this field.

Huff Insurance is a full service Independent Insurance Agent We have been dedicated to Protecting Lifestyles™ since 1960. We offer a full array of Personal Insurance, Commercial Insurance and Life Insurance & Health Insurance products. Call us at 410-647-111

Jerry Nicklow

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