You’re here, so thankfully you see the importance of insuring your small business. Unfortunately, 6 out of 10 home business owners don’t get this. A standard home insurance policy simply isn’t enough!
So what is the best way to get commercial insurance for a home-based business?
You have 3 choices based on the kind of company you have and the insurance company you are working with.
1. Homeowners Policy Endorsement
A standard home owners policy isn’t enough coverage for your home-based business. Here is the thing though: Did you know that you may be able to add a simple rider to your existing homeowners policy that doubles the $2,500 standard coverage for business equipment such as computers? That means you can raise the policy limits for losses related to a home business to $5,000 or $10,000 simply by adding a little more to your premium. This is probably the least expensive option to protect your business equipment.
The downside of Homeowners Policy Endorsement is that if you have business equipment that is more than $5,000 -$10,000, then you will not have enough coverage with this plan. The other downside is that this will not provide business liability or business income coverage.
PRO TIP: If you only have a handful of clients that come to your home each month, then you can buy a homeowners liability endorsement that will protect you in case clients or delivery people get hurt on your premises and sue. The homeowners liability endorsement is typically available only to businesses that have few business-related visitors. Talk to your insurance agent to see if you qualify.
2. In-Home Business Policy
This is the next step up from a Homeowners Policy Endorsement. Imagine a home insurance policy bundled with a small business policy. That is exactly what this type of policy accomplishes. An in-home business policy provides more comprehensive coverage for business equipment and liability than a homeowners policy endorsement. Did you know that many insurance companies offer insurance policies specifically tailored to small business like yours?
Is it expensive?
The good thing is that the average home-business insurance policy can cost anywhere from $250-$500. Of course, the cost depends on the type of business you operate, the kinds of safety features that are in place, and the amount of coverage you decide upon. Here are some additional benefits of this policy in addition to standard protection for your business property:
- Loss of important papers and records, accounts receivable and off-site business property
- Lost income in case your home is damaged by a fire or other disaster so it can’t be used for business
- Reimbursement for the extra expense of operating out of a temporary location
- Broader liability insurance for higher amounts of coverage
- Protection against lawsuits for injuries caused by the products or services you offer
- Usually covers up to 3 employees
Talk to your agent about whether this will work for your home-based business.
3. Business Owners Policy (BOP)
The final choice is the the Business Owners Policy, also known as a BOP. Instead of buying a bunch of separate policies from different insurance companies, a BOP is a group of packaged policies designed to meet the insurance needs of many small businesses.
A BOP typically covers:
- Business property
- Loss of income
- Extra expense
A BOP doesn’t cover:
- Workers compensation
- Health insurance
- Disability insurance
- Commercial car insurance
Will you qualify?
It depends on factors such as these:
- What is the size of your premises?
- What are the limits of liability required?
- What type of commercial operation is it?
- What is the the extent of its off-premises servicing and processing activities?
You know that you need to protect your home-based business with insurance. Thankfully you now know that you have have 3 choices to do this.
Which one is right for you?
It depends on your specific circumstances with your home-based business. The only way to do this is to set up a consultation with your local insurance agent. Thankfully, InsuranceHub is designed to help you to find out exactly which option is ideal for you.
Feel free to reach out and contact us right now. As is the case with any insurance policy, a safe work environment can help lower property premiums. Make sure you have fire detectors and a security alarm system. Also have a computer-data backup procedure, and store the data backup away from your home. If you have an effective system, it may not be necessary to pay an additional premium for loss of business data.