Many of the small business owners today operate out of their home. According to the Small Business Administration over 50 percent of current small businesses are located in a home, and many new ones are starting every year. It’s common for these entrepreneurs to believe their homeowners’ insurance policy will meet the insurance needs of their business. Unfortunately, the majority of homeowners’ insurance policies do not provide adequate protection for a home-based business.
Limitations
Most homeowners’ insurance policies offer only limited coverage for any type of business equipment. Many of the standard policies will state that they do not cover a business that is operating out of the home. There are many factors to consider when deciding what type of business insurance policy to purchase. An insurance company will want to know if there are employees, use of hazardous or flammable materials, business signs displayed, medical equipment and more.
Homeowners’ Insurance Policy
A home-based business owner needs to know certain things about their homeowners’ insurance policy. They need to know if it does cover their business and what coverage it will provide. It’s important to know if the policy will provide coverage for business equipment. Should an entrepreneur have an outside office, but spend most of their time working at home, they may need additional coverage for protection from a work-related problem that may happen in the home. If they have clients or employees coming to their home, they need to know if their policy will cover third-party accidents. Most homeowners’ insurance policies with slight business coverage do not.
Business Insurance
There are many home-based business owners who discover they need a business insurance policy to protect their company. A home-based business policy can provide liability coverage. This will protect them if a liability claim is placed against the business. They may also need property coverage. This will provide protection against any loss of business assets. This could include everything from computers to merchandise and more. Loss of income coverage is also essential. This could be important if a business owner is forced to stop operations for an unforeseen period of time. It’s always possible to get insurance quotes when looking for business insurance.
Types Of Home-Based Business Insurance
Entrepreneurs who have a small business in their home will usually choose between two different types of business insurance. The type of policy a business owner chooses will be determined by the size and type of their business. It is possible in a number of cases to purchase a rider to a renters’ or homeowners’ insurance policy. In many situations, this could be very cost effective. Some insurance policy riders are able to offer protection for business equipment, third party liability coverage and more. There is also a Business Owner’s Policy (BOP) that often works well for small businesses. This is a business insurance policy that will provide a small business owner with the most comprehensive coverage. It will provide protection against a number unforeseen problems such as business interruption, professional liability claims, business equipment damage. This may be the preferred type of business insurance policy with small companies that manufacture products, stock inventory, conduct business outside as well as inside the home and more.
Medium-Sized Home-Based Businesses
When a home-based business is a medium-sized company, it will have assets of up to $10,000 or more. When a company is this big, they need to consider a specialized home-based business policy. Some of these policies are able to provide companies with a $1 million in liability coverage as well as $10,000 in property coverage. In many cases, this can be provided for under $100 a month.
Commercial Insurance Policy
This type of business insurance policy should be considered by larger home-based businesses. These companies will have a variety of assets and need to have substantial coverage. These types of policies will provide the holders with different types of liability coverage. This could include provision insurance to cover malpractice as well as negligence and more.
