If you’ve recently started your own business and work from home, you'll probably need to upgrade your insurance coverage. At-home business owners often assume their homeowners policy covers their business equipment. In fact, your homeowners policy may include little or no coverage for your business property and business liability exposure.
Depending on what you do, you may also need business interruption insurance, workers' compensation coverage, and business auto coverage. Finally, you should also take a look at your need for life, health, and disability insurance. All in all, here are 5 key ways insure your home business.
1. Homeowners Policy
Homeowners policies generally cover business property on your premises only to a certain limit, usually about $2,500. Coverage for business property away from your premises is even more limited, with most policies having a $250 maximum. That is the extent of insurance coverage for your business in the typical homeowners policy. You aren't covered for business liabilities, including things like a delivery person or a client injuring themselves while on your property.
2. Home Office Policy
Many insurance companies now offer the home office policy, which is a combination of a homeowners policy and a business owners policy. This policy provides adequate business liability coverage, business interruption coverage, and increased limits for your business property, along with the traditional coverage found in a homeowners policy.
The business property limits typically begin at $10,000. Depending on the policy, the business liability limits may range from $300,000 to $1 million. The policy covers lost income and continuing expenses for up to one year in the event your home is damaged and you're unable to work. The policy also covers loss of valuable papers and accounts receivable, while offering higher limits for equipment breakdown coverage and business property used off-premises.
3. Business Owners Policy
This type of commercial policy is designed specifically for small businesses. Traditional business owners policies (BOPs) are very comprehensive because they cover buildings, business property used on- and off-premises, and liability. Also covered are computers and other business equipment, software, data, loss of income, continuing expenses, and professional liability for certain occupations.
4. Life Insurance
Even if you already have life insurance, it's probably time to re-evaluate your coverage. While you might not need more coverage just to work from home, be sure you haven't lost any coverage. For example, if you lost employer-sponsored coverage when you left your previous job, you may want to make up the difference so that you're still adequately protected. You may also need more insurance to cover any debts or liabilities you took on to develop your business.
5. Key Employee Life Insurance
Key employee (or key person) life insurance covers financial loss to your business due to the death of your partner or another crucial employee whose contributions are essential to keeping the business running. If the covered individual dies, your company receives a death benefit. Your business can use that death benefit for anything from operating expenses to a search for the right replacement. If you depend on the creativity or unique skills of someone other than yourself to run your business, look into key employee policies.