If you have a home-based business, or if you work out of your home full-time or even just some of the time, you may be uninsured or underinsured. You might think you have coverage under your homeowners policy, but that coverage is likely minimal, if you have any at all.
A typical homeowners insurance policy limits coverage for office equipment to around $2,500—not nearly enough to replace a computer, printer, phones, desk, fax, scanner or other equipment. What’s more, your homeowners policy will not cover business liability, loss or damage of business records, and damage caused by business interruption.
Your coverage is likely insufficient if you work from home and have a well-equipped office, as well as business files and records on hand. What kind of coverage do you need to fill the gap? There are several potential answers, depending on your specific situation.
- Endorsement to your homeowners insurance policy. You can add an endorsement, or rider, to your homeowner insurance policy that provides more coverage for your home-based business or home office. This type of policy is most appropriate for a one-person business without a lot of valuable equipment or many business related visitors, and one who is unlikely to suffer a major loss if unable to operate for a while as a result of a disaster. The endorsement will typically add about $2,500 in business equipment coverage as well as some additional liability protection at an affordable price.
- In-home business/home office insurance. Some insurance companies offer a specialty policy for in-home businesses or home offices. The in-home business policy has some features of policies designed for larger businesses, but with much lower policy limits. A typical in-home business policy will provide $10,000 of business property coverage and a liability coverage limit of your choice, usually between $300,000 and $1 million. It will also provide limited coverage for loss of valuable documents, accounts receivable, offsite business property and use of equipment. These policies are considered to be affordable for most people with home offices, and provide more broad protection than an endorsement on your homeowners policy
- Business owners policy (BOP): A business owners policy is designed for small businesses. It bundles several types of coverage into one policy, allowing the business to secure broad coverage at an affordable price. It is recommended for home-based entrepreneurs who need more than $10,000 of business property coverage as well as coverage for damage to equipment and other assets, liability coverage for customer injuries, loss of critical records coverage, and business interruption coverage, which protects you if you are temporarily unable to operate due to a covered loss (fire, storm, etc.)
Do you regularly work from home or are you thinking of starting a home-based business? Do you have a designated office space in your home that is fully outfitted with office equipment? Do you keep business records and files in your home office? Contact us today to discuss your coverage needs and options for protecting your home office