It is estimated that over 36 million Americans currently work from home, and the number is growing each year. It’s an attractive way to make a living because the daily commute consists of a short walk from the bedroom to the home office each morning.
What many don’t consider is the need for business-specific insurance for their work-at-home company. They believe, erroneously, that their homeowners insurance covers them adequately.
Why You Need Business Insurance at Home
Most homeowners policies provide coverage for your home-based business to the tune of $2,500 or less. This is short of what it would cost to replace computers and electronic devices. And no coverage is included for litigation or business disruption.
If you are a consultant working out of your home and get sued by a client because he feels your advice caused problems instead solutions, you are not covered.
If you bake at home or run a small catering business, you are not covered if someone gets sick after eating your appetizers.
If you fix computers from your home and a client is so upset with your work that he sues, you are not covered.
Home-Based Business Insurance
What type of insurance you need if you work from home varies according to several factors, including:
- If you have business visitors to your home.
- If you carry much inventory.
- If you provide professional services.
- If you have a complex product.
- If you are in a field where customers are litigious.
Here are three types of insurance to look into if you work from home.
Endorsement. If you have a very small business, you might be able to add coverage to your existing homeowners policy to obtain adequate coverage with an endorsement. This is especially true if you have very little investment in equipment, clients don’t visit you at your home, and your products and services are uncomplicated.
For example, you might be able to double your coverage for business equipment for under $20 with an endorsement. Ask your agent.
Home office policy. A home-office policy gives you the basic coverage that all homeowners policies do, including theft, personal liability and fire. In addition, it provides protection for business property, loss of income, commercial liability, loss of valuable records and papers, business property not in your home and accounts receivable. Coverage is also available that protects against theft and equipment breakdown.
Business Owners Policy. If you do much business away from your home office, a home office policy isn’t adequate. In that case you need a business owner’s policy, usually called BOP. It is wise protection for anyone who handles an extensive amount of inventory, has complicated products, or provides professional services. BOP protects you if you are sued. The cost varies according to the amount of coverage.
To enjoy the benefits of working from home without worrying about possible risks, contact your insurance agent. Talk to him about the coverage available for your home-based business. He can help you decide the type of policy and how much coverage you need for adequate protection.
