Home-based businesses operating on a small scale face many of the same risks as their larger counterparts. Third-party claims, and car accidents are examples of such risks. Therefore, business owners must purchase adequate insurance to protect themselves from losses. Some business owners might think that their homeowners insurance is enough to cover claims arising from their home-based business activities. However, this is a faulty assumption because most homeowners policies contain business-related exclusions and limitations.
How Do I Insure My Home-based Business?
As an extension of your home insurance, you can get coverage for your home-based business. If your home-based business has more than one-to-two-person working for it, you may have to buy standard business insurance. Your financial advisor can help you decide on the type of coverage you need for your situation.
Why Do I Need a Home-based Business Insurance Plan?
A home-based business insurance plan will cover your office equipment (on-premise and off-premise) and business inventory in the event of an insured loss. Most importantly, it will pay for any additional liability incurred by clients, delivery personnel, or employees.
Types of Coverage
Small business owners have three options for insuring their home-based operations. They can cover business exposures via endorsements to a homeowners policy, purchase an in-home business policy, or buy a business owner’s package policy, depending on the size and type of business and the cost of coverage.
1. Homeowners Policy Endorsement
Many home-based businesses rely on technology such as computers and printers. Most home insurance policies have a very low limit for equipment used for business purposes at the residence. Business owners can increase this limit by purchasing an endorsement for an additional premium.
Business owners may also have the option of adding a homeowners liability endorsement to their policy. The endorsement covers third-party claims for injuries sustained by customers or others on their property. It’s available only if the policyholders have few visitors to their premises.
2. In-home Business Policy
An in-home business policy offers more coverage than a homeowners endorsement. It includes business personal property and general liability coverage. Optional coverage like business income, valuable papers, and accounts receivable may also be available.
In-home business policies vary from insurer to insurer. So before you buy a policy, make sure to understand what it does and doesn’t cover.
3. Business Owner’s Policy
A business that needs more coverage than an in-home policy can choose a business owner’s policy (BOP). A BOP is specially designed for small businesses, including commercial property, business income, and general liability coverage.
This is what you need to know about home-based business insurance and how it can protect your business. Contact Massive Insurance for all of your insurance needs in Pasadena and surrounding cities in California.