Do You Need Insurance For A Home Business? The most common reason that business owners don’t get business insurance for their home based business is simply the fact that they don’t even know that they need it. A large number of homeowners have purchased a home insurance policy however, home based business owners aren’t aware of the fact that they are not covered under that homeowners policy so they neglect to buy the appropriate one.
What even is a Home Based Business Insurance Policy?
By definition a home based business is a business that is being conducted out of the main office of the business and where the business owner lives. The reason that home insurance policies do not cover home based businesses is due to the amount of the items that are being insured. Home insurance policies has a small amount of coverage for items including books, tools or anything that may be for a business. The problem is that this limit isn’t enough and if a loss was to occur, the insured would not be adequately covered. This has lead to the development of the home based business coverage which covers more than the homeowner policy would.
How Can I Get Insurance For My Home Based Business
For your home based business there are a few different options to select from, to ensure that you have the correct coverage it is always a good idea to discuss it with your broker who can advise you which option is the best for your business.
Option 1: Adding an Endorsement To The Homeowners Policy
The least expensive option is to add an endorsement or a rider to the property policy which adds additional coverage to the home based business. This addition of insurance is intended for a one person business with not alot of valuable equipment who doesn’t get clients coming to their home office. If losses such as a fire or another disaster were to occur it would not be a big loss to the business because this kind of coverage is suitable for accountants or sales people who don’t keep inventory at home and just use the home office. You may wonder why you even need a special insurance policy? Well say for example, a delivery man slips in your driveway and hurts themself while delivering a package, your homeowners policy has no coverage for that kind of damage and by adding this endorsement/rider you would be protected against perils such as this.
Option 2: The Home Based Small Business Insurance Policy
This option is to get an entirely different policy for your home based business, the difference between adding an endorsement and getting a new policy is that this option has a higher premium that is going to be charged during the policy term. Things that are not included in the endorsement that are included in this option is coverage for inventory & equipment as well as liability for injury. The reason one would want to purchase this home based business policy is for businesses that have a substantial amount of clients coming to their home and or have a large inventory at their home.
Option 3: Business Owner Insurance Policy
The last option is to purchase a business owner insurance policy, this is what any other businessman would need. The difference between this and the other two options is that this is the most expensive option with the widest coverage. The difference in coverage between the different options ist that this provides coverage on the entirety of the property and the operations which are not on the property. This option is optimal for businesses who have a home office with alot of equipment/inventory.