Do I Need Home-Based Business Insurance Coverage?

It’s never been easier to run a small business from the comfort of your home — in fact, more than half of all small businesses in the United States are home-based. And if you’re one of the millions of entrepreneurs running daily operations from your residence, it’s important to understand how to safeguard your investment from the unexpected.

Let’s take a closer look at how small home business coverage can help protect the dream you work hard for each day.

Is Home Business Insurance Coverage Included in My Existing Homeowners Policy?

You may think that your small home business is covered by your standard homeowners insurance policy, but that’s not the case. Actually, if you’re planning on conducting any business from your home and want coverage for liability events such as a customer slipping and falling on your front steps or coverage for damage to your business property, such as a fire ruining your equipment, you’ll need to add limited home business coverage or business property coverage.

What Does Limited Home Business Coverage Mean?

Limited home business coverage is an optional coverage that small home-based business owners can add to an existing homeowners insurance policy. By adding this coverage, you’re extending the same liability limits and coverages of your personal home insurance to your small business.

As you begin to think through what kind of protection you need, it’s important to consider whether or not this limited protection is enough for your business. You may need a more specialized commercial policy, which has more extensive and broader coverage. Your skilled insurance agent can help you make the decision and select the coverage you need.

Business property coverage covers property up to $15,000 from the same types of losses listed on your home insurance policy. So if you face damage from a loss, such as theft or fire, your business’ personal property will be covered for up to $15,000 worth of damage, after paying your deductible. Without business property coverage, your homeowners policy is limited to $1,500 for business property.

What Types of Home-based Businesses Are Covered?

Businesses commonly covered under this type of insurance include:

• Accounting/ financial planning
• Editorial services
• Event planning
• Florist services
• Graphic design
• Hair styling/barbering
• Home demonstration (jewelry, cosmetics, home goods)
• Jewelry making
• Music, dance or yoga instruction
• Photography
• Tailoring
• Tutoring
• Tax preparation
• Web design

Benefits of Home-Based Business Insurance

If your business is being run out of an office or studio in your home, you’ll find more peace of mind with a policy that’s customized to protect your livelihood. Here are a few examples of the ways home business insurance can be good for your business and your financial future.

Home Daycares Can Be Better Protected

Limited home business coverage provides protection for your pint-sized business, but if you’re watching over pint-sized people, you’ll want to connect with your agent to discuss home day care coverage.

Artist Studios Can Get Expensive

If you’re an artist working out of your home, your studio may contain specialized and expensive computer equipment or other high-value items. With clients visiting, and business being conducted out of your studio, additional home business insurance can help cover the costs if the unexpected should happen. Note that if you have more than $15,000 in specialized equipment, you should probably consider picking up a commercial policy to best protect your investments.

Insurance Options for Freelance Telecommuters

The work-from-home lifestyle offers the best of both worlds: zero commute and the freedom to build your own work schedule. But the technology you depend on can be costly to replace if something should happen. This broad-spectrum insurance can help protect your electronics as well as the furniture and other expensive tech in your home office.

Home-based Business Insurance vs Commercial Insurance Policy

Home-based business insurance is for homeowners who run a small business directly from where they live. While this coverage is great to have, you’ll need to determine if your small business is sufficiently covered by limited home business coverage or if you’ll need a more extensive commercial insurance policy.

What’s the difference? Consider the property coverage limit of $15,000. Would this be enough to cover all of your business property — including the items you sell, and the tools and materials you use to make them — in the event of a loss? If not, and your total property value surpasses the limited home business coverage limit, a commercial policy is a better alternative.

A commercial policy provides broader liability coverage as well, including coverage for liability arising out of any products you make or sell. Here’s some more info about why your business needs insurance — and that will help you to better determine which type of coverage works best for you.

This coverage is not available in MN at this time.

Some coverages may not be available in your state or on your specific policy form. Please speak with your agent to learn more about your coverage options.