Did you know that more than half of all businesses in the US are home businesses? That means you’re in good company, especially if you are one of the 40% of small office home office businesses that carry adequate insurance.
Here’s what you need to know about having insurance for your home business:
Your homeowner’s insurance policy does not cover your home-based business.
We repeat: Homeowner’s insurance DOES NOT cover business assets
One would assume that a homeowner’s policy would provide sufficient coverage for a home business, but it doesn’t. Even if it does include business coverage, the amount is likely rather limited. The average policy offers around $250 for premises, and it doesn’t necessarily cover business assets, such as:
- Outside buildings used for business purposes.
- Damage or loss of data or business records.
- Loss of income caused by loss of business property.
Here are some good reasons to consider getting yourself a policy that is designed to cover your small office home office:
- If you’re a financial adviser and a client sues you because your advice cost him money, your homeowner’s policy will not even look at it.
- If you’re a photographer or an IT professional, your home may be targeted in a robbery and you could lose all your expensive equipment. Since your computers, cameras and other equipment are considered business property, it will not be fully covered by your homeowners’ insurance.
- Most homeowners’ policies do not cover third party claims, especially for business deliveries, so they will not cover slip and fall accidents that occur when someone is delivering something to your home.
- If the outbuilding or shed on your property from which you run your business catches fire and you lose your equipment as a result, your homeowner’s policy will not cover it.
However, for a small additional fee, you can probably include add-on cover to your homeowner’s policy to protect you from the situations described above. It may just be sufficient for your small one-person operation, especially if you don’t have a lot of business equipment, and if you don’t receive many deliveries or visitors.
But, if you require better protection, you may want to consider:
General Liability for your SOHO – This policy will protect you from third-party claims, such as those from delivery drivers, liability or slander, and damage to a third party’s property (if you rent temporary office space, conference facilities or storage).
Professional Liability – Errors and omissions insurance provides protection in case you are sued for negligence.
Business Owner Insurance – Business owner policies provide comprehensive cover, including professional liability claims, loss of business data or equipment, and general liability.
Property Insurance – General liability insurance policies usually include property insurance.
Life, Health, and Disability Insurance – This policy provides an extra layer of protection in case you and or your employees suffer injuries or death.
Be smart about your home business in the short term, and you will reap the rewards in the long term.