You’ve decided to start that business that you’ve dreamed about for years. It’s a small business based out of your home. You’re doing what you love and you’re ecstatic to get started. Everything’s all set and ready to go…except the insurance. How are you going to insure your home-based business? The truth of the matter is that your home insurance probably won’t be enough to cover your business and protect you from all of your risks.
But not to worry – you have options for insuring your home-based business. We’ll go over three of the common options for insuring your business (a homeowners endorsement, an in-home business policy, and a business owners policy – aka BOP) so that you can start thinking about what the best solution is for you.
A homeowners endorsement basically builds on the coverage that’s included in your homeowners policy. Most homeowners policies do cover a limited amount of business equipment, but your limits might not be enough to cover all of your business property. And homeowners insurance might not cover liability for employees or clients who are visiting your home.
A homeowners endorsement adds to your coverage, yes, but it might not be ideal for a business that includes employees or clients who visit the premises. It also might not be best for a business that has much valuable equipment or inventory. It might not give you all the coverage you need.
In-home Business Policy:
An in-home business policy is more extensive than a homeowners endorsement. It’s a stand-alone policy that gives you higher limits of coverage for your business equipment and for your liability.
Business Owners Policy:
A Business Owners Policy, more commonly known by its catchy nickname, BOP, gathers property insurance and liability insurance into one convenient policy. It covers your business equipment, loss of income, extra expenses, and liability. This is the most comprehensive of the three options presented here. It’s meant for small to mid-size business. Keep in mind that it won’t cover workers’ comp, health, or disability insurance, so those would have to be added separately if you need them.
How do I know which one is right for my business?
Your business is unique, so you’ll have to consider the value of all of your business’s property and your specific risks to decide what kind of insurance is appropriate. We have some questions to help you do that.
- How much is your equipment worth?
- You’ll have to take an inventory of all the equipment, tools, and supplies that you need for your business. While you’re at it, you may as well take a home inventory, too!
- Does the service you provide create liability?
- What would happen if you made a mistake, an error, or an omission? What professional liabilities do you have?
- What if your product doesn’t work?
- Do you ever assume care, custody, or control of your clients’ belongings?
- Do you have inventory on hand?
- This goes back to taking that inventory – you need to make a list and keep track of all the materials and products that you sell. This includes materials you might use if you manufacture anything.
- Do you use any vehicles?
- Your business vehicles need to be properly insured. You’ll have to review your auto policy or talk to your agent to figure out if your personal auto insurance is enough or if you’ll need to get commercial auto insurance.
- Do you or employees perform work in your customers’ homes?
- You’ll want to protect against employee dishonesty.
- Do you have employees?
- You’ll need to get the workers’ comp required by your state.
The answers to these questions can help you identify which risks that you need to protect yourself against. Some of the common coverages that home-based business owners get for their business include personal business property, professional liability, business income, personal and advertising injury, loss of business data, crime and theft, workers’ comp, and auto coverage. But of course, you might not need all of these coverages. Or there might be other coverages that are more suited to your business.
Every business is different, and you have a vision that you want to fulfill, and we want to make sure you’re protected from your risks while you do it. We can help you determine which coverages are right for your business. All you have to do is fill out our quote form or give us a call and we’d be happy to get you a free quote. We can help you design an insurance plan that’s designed specifically for your home-based business and that takes care of all your risks.