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5 Questions About Insuring Your Home Business

5 Questions About Insuring Your Home Business

Is your business in your home?

A home-based business gives you flexibility, but it’s not without risk.

Here are 5 questions that you need answered about insurance for your home business.

1. Does my home insurance cover my home business?

Your home insurance policy does not cover damages or accidents that happen due to you running your business at home.

Your home insurance policy coverage may extend to some business property stored at your home, but not necessarily to merchandise, computers or specialized equipment related to your business.

In some cases, an endorsement can be added to your home insurance policy to protect your home-based business. If you are a freelance or contract worker or have a small home-based business, it may provide enough coverage for your business property and liability coverage.

2. Do I need to tell my insurer that I have a home-based business?

You might not think so, but you need to be covered in case the unexpected happens. Before you launch your home-based business, contact your insurance broker, and find out what kind of coverage is needed for the type of home-based business you're going to launch.

3. How does a separate home-based business insurance policy work?

A home-based business insurance policy is a stand-alone policy that provides higher amounts of coverage for business equipment and liability. It typically covers your office equipment, business inventory on and off your premises, and business interruption insurance if anything were to happen to your home as the result of an insured loss.

What does it typically cover:

  • Theft
  • Customer injury such as a slip and fall
  • Lawsuits
  • Product and service liabilities
  • Damaged equipment

4. Who should get home-based business insurance?

It’s for self-employed individuals or sole proprietor ownership businesses that operate only out of their home, such as a day care, an online business, a jewelry designer, or pet groomer.

If you live in a condo, you need to know if operating a home-based business is against your condo regulations.

5. What kind of coverage will it give me?

Typically, home-based business insurance would include:

  • Liability insurance: It would cover most damages awarded against you and it would also help pay the legal costs to defend you in a lawsuit. Personal liability on your home insurance would not cover these situations.
  • Commercial property insurance: It covers losses such as fire and extended coverage can include protection for water damage, smoke, and vandalism.
  • Commercial home business insurance: This is the most comprehensive option and is the same type of plan that other small businesses use. It ensures that your business doesn’t increase the risk of damage to your home, to your business, or to yourself.
  • Product Liability Insurance: It will protect your business against any legal liability for claims for bodily injury or property damage stemming from your products.
  • Commercial car insurance: If you use your car for your business, it needs to be insured for business use. If you’re in an accident, your insurance will cover damage to your vehicle and your liability to others.

Any product, equipment or supplies that might be stolen or damaged while in a vehicle will not be covered under your regular car insurance or a home insurance policy. You will need to add an endorsement to your policy to ensure your equipment is covered against theft or damage.