If you currently run a home-based business or are considering it in the future, don’t make the mistake of assuming your homeowners insurance policy provides coverage for your business needs when the unexpected happens.

Just because you operate a business in your home doesn’t mean your exposures are covered—purchasing the right insurance coverage today may be the difference between success and failure. A homeowners insurance policy is designed to cover personal exposures, not business exposures. Here’s what you need to know to make sure you’ve got all your business insurance bases covered.

Protect Your Livelihood and Your Home

Just because you operate a business in your home doesn’t mean your exposures are covered—purchasing the right insurance coverage today may be the difference between success and failure. A homeowners insurance policy is designed to cover personal exposures, not business exposures. Here’s what you need to know to make sure you’ve got all your business insurance bases covered.

To understand your exposures, it’s important to review your property value and business exposures. To get you thinking, here’s a list of questions to consider:

  • How much is your equipment worth? Conduct an inventory, listing everything you use to operate your business.
  • Does the service or product that you provide create extra liability? For example, what if you made an error or omission? Do you serve alcohol? What if your product is defective? Do you take possession of your customers’ property?
  • Do you stock inventory? If so, make a list of the materials and products that you sell and, if you do any of the manufacturing, the materials used to make them.
  • What about vehicles? Any vehicle used for business purposes must be insured, even if it’s personally owned.
  • Do you, or your employees, perform work in customers’ homes? If so, a third-party fidelity bond will pay for losses due to fraudulent acts, such as theft.
  • Do you have employees? If so, you need the appropriate workers’ compensation coverage as required by the state.

Coverage Options for an In-Home Business

When insuring your home-based business, there are three basic choices, depending on the nature of your business:

  1. Homeowners Policy Endorsement. This provides the least amount of coverage and, therefore, is not ideal for most home-based businesses (depending on the level of risk). It may provide enough coverage for a freelance writer with one computer and no business foot traffic. But it’s not enough for someone who employs others, has clients visiting his or her home or has valuable business equipment and/or inventory.
  2. In-home Business Policy. More comprehensive than a homeowners policy endorsement, in-home business coverage is a stand-alone policy that provides higher amounts of coverage for business equipment and liability.
  3. Business Owners Policy, or BOP. A BOP bundles property and liability insurance into one policy. Created specifically for the small- to mid-size business, a BOP covers your business property and equipment, loss of income, extra expense and liability. It is the most comprehensive property and liability option. It does not include workers’ compensation, health or disability insurance, which are available as separate policies.

What’s Your Risk?

While most homeowners insurance policies do cover a limited amount of business equipment—computers, copiers and printers—it’s likely that what you own is worth more than your policy’s limits. Also, your homeowners liability insurance probably won’t cover injuries that may occur to employees or clients on your premises.

Properly insuring your home-based business is crucial to protecting both your business and your home. At Neckerman Insurance, we understand the small business owner’s personal and business needs; we can help you tailor coverage that’s as unique as the products and services you provide.

Contact us at 608-238-2686 to learn more about how we can help you insure your livelihood.

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