Insuring a home-based business is important to protect not only the business, but also your personal home and the property that the business owns, even if it is kept at your residence.
If you have a homeowner’s policy, there is a good chance that it will not cover the homebased business. In many instances, the homeowner’s policy will not cover the business and having a separate business policy is necessary. Additionally, the homeowner’s insurance policy might need to be endorsed for you to operate a home-based business out of the home even with a separate business policy in force. Homeowners policies typically exclude business activities no matter where the business is conducted or located.
One general rule that applies to most situations is if the business earns more than $2,000 per year, you should have a commercial general liability policy or a business owner’s policy in force to insure the business and its activities.
It is also important to note that the property coverage provided by your homeowner policy might not cover business property out of your home (this includes any inventory that you would keep in your home for business use). For example, homeowner policies contain specific “other structures” exclusions pertaining to business operations, so if you’re conducting a business activity out of a detached garage, shed, or barn, you might find yourself with no insurance coverage if that “other structure” is damaged or destroyed. The business owner’s policy can cover the property and the building that you are conducting the business out of, even if it is on your personal residence.
Talk to your local independent insurance agent to discuss the right type of insurance policy for your home-based business. There are multiple products out there to help find you the right coverage for your home-based business, and ever situation is a little different. Your independent agent is here to help you find the right coverage for every situation.