Won’t my homeowner’s insurance cover my home based business?
Contrary to popular belief and what some feel should be included in homeowner’s policies, they generally do not cover business losses. Homeowner’s insurance policies are written to protect the personal and day to day use of your home. Many policies will specifically exclude coverage as it pertains to conducting business and will only go so far in covering anything related to a home based business.
It’s important to understand the risk involved with operating a business, regardless of home based or not. If nothing else, a home based business owner should consider purchasing a business liability insurance policy. This insurance will cover claims due to accident or negligence if another party claims injury either bodily or to their property.
Depending on the type of business, it may make sense to explore the need for professional liability or errors and omissions insurance. A number of businesses which may be home based starting out like an accountant, consultant, or computer/web hosting company should consider professional liability insurance. This insurance covers claims of malpractice, negligence, or improper advice given to a third party. This insurance will cover legal costs and awards which could cripple or put a small company out of business.
If your business is storing inventory, developing and manufacturing products, or has high end or expensive equipment or furnishings, you should consider some form of commercial property insurance. This property insurance covers a wide variety of losses and in the event of fire or other types of damage. This type of insurance should be reviewed carefully with your licensed insurance professional.
If your business has employees, then workers compensation insurance is probably required. Again, your licensed insurance professional will guide you in developing an insurance program for today and beyond.