Sales POP - Purveyors of Propserity
Does Your Homeowners Insurance Cover a Home-Based Business?
Blog / Marketing / Feb 9, 2022 / Posted by Laura Adams /

Does Your Homeowners Insurance Cover a Home-Based Business?

0 comments

Running a home-based business can be a lot of work, but it can also benefit your finances and lifestyle. A critical part of running a successful business is purchasing the right insurance that protects you and your venture from potential risks.

In many cases, a basic homeowners insurance policy doesn’t cover business activities or assets in your home. However, you can purchase insurance endorsements or riders that extend coverage for your business needs.

Here’s a closer look at what home insurance covers and doesn’t, so you know if you should purchase additional coverage for your home-based business.

What’s not covered by homeowners insurance

Most standard home insurance policies don’t cover:

  • Business property worth more than $2,500.
  • Computer data loss.
  • Business records.
  • Injuries or medical bills for employees or customers who get injured on your property.
  • Loss of income after damage from a covered event, such as fire, lightning, floods, windstorm, or theft.

It’s critical to read your homeowners policy or speak to your insurer to understand what coverage gaps you need to fill in for your home-based business.

Home insurance options for additional business coverage

If you need additional coverage for your home-based business, consider these options.

1. Home business endorsement

Adding a home business endorsement to your existing homeowner’s policy is an add-on that increases coverage for your business-related property. It could increase your annual premium from $2,500 to $10,000 or more.

2. Commercial liability

Some insurers offer a liability endorsement that protects you if someone gets injured on your property, such as customers or employees. Anytime you have visitors inside your home for a business purpose, you need additional liability coverage.

A downside of a business endorsement is that your insurer may not cover you if many employees or customers visit your home. In that case, you’ll need to purchase commercial property insurance.

3. Business owner’s policy

A business owner’s policy (BOP) is a bundle of policies designed for small and mid-sized businesses. It typically includes broad coverage for liability, property damage, and income interruption (if you can’t conduct business from your home after a covered disaster).

Most major insurance companies have BOPs. So, if you already have auto insurance with Progressive, ask about their business insurance options. In most cases, you can personalize coverage for various risks that apply to your work, such as damaged inventory, cybercrime, and equipment breakdowns.

Insurance shopping tips

The types and amounts of insurance you need for a home-based business depend on various factors. For instance, your homeowner’s policy may be sufficient if you can work from anywhere and don’t have employees, in-person customers, or expensive business equipment.

However, if a home disaster, such as a fire or theft, would leave you unable to operate your business, having interruption coverage would allow you to recoup lost income. And if you have a lot of business equipment, inventory, or foot traffic, you likely need much more liability and property coverage than a typical home insurance policy.

Be sure to ask your insurer if you qualify for discounts, such as being a homeowner or bundling insurance policies. Every carrier offers different types and amounts of discounts, so being proactive can pay off with lower premiums.

Here are some questions to consider for making sure your coverage reduces business risk and gives you peace of mind:

  • Do you intend to hire employees?
  • Do you have customers, clients, or employees who visit your home?
  • Would you be able to operate your business if your home was temporarily unavailable?
  • Do you store equipment or business vehicles at your home?
  • What’s the likelihood of getting involved in a lawsuit?

If you’re unsure what insurance you need for your home-based business or how to save money on coverages, be sure to get advice from a licensed insurance professional. They can help anticipate potential risks for work and industry, so you avoid financial losses.

About Author

Laura Adams is a personal finance and small business expert, award-winning author, and host of Money Girl, a top-rated weekly audio podcast and blog. She’s frequently quoted in the national media, and millions of readers and listeners benefit from her practical financial advice. Laura’s mission is to empower consumers to make smart money decisions every day through her speaking, spokesperson, and advocacy work. She received an MBA from the University of Florida and lives in Vero Beach, Florida.

Author's Publications on Amazon

This book is an easy-to-follow guide to eliminate debt faster than you ever thought possible and create the financial future you deserve.
Buy on Amazon
Laura doesn't tell you what you can and can not buy with your own hard-earned money; instead, she gives you guidance, tips, and tricks you need to make the most of it.
Buy on Amazon
Getting out of debt might seem overwhelming, but it doesn't have to be no matter how much you owe.
Buy on Amazon
Whether you're learning the quickest way to improve your credit score or the seven essential tips for preventing identity theft, you'll be surprised and relieved at just how doable it all is.
Buy on Amazon
In this book, Laura D. Adams answers questions every aspiring and new entrepreneur has about creating a business and building a secure financial future. It's a complete guide for what to do, critical mistakes to avoid, and how to start a solo business without taking…
Buy on Amazon
Their wisdom and experience will turn your uncertainty into confidence, your ineptitude into skill, and your questions into answers.
Buy on Amazon
Comments

..
..
.
Sales Process Automation
.
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. For information on cookies and how you can disable them, visit our privacy and cookie policy.