The time is finally here. You quit your full time job and are going to fulfill your dream and start your own home-based business!! Your hobby of many years has now transformed into a new business venture. You own your home and have it covered by homeowners insurance, but does that also protect your new home-based business? Well, there’s a chance it will not. Most homeowners insurance policies do cover a small amount of business equipment, but it’s likely that what you own will exceed the limit offered. Also, the liability portion of your homeowners insurance policy will not cover any injuries that may occur to any clients that may be on the premises.
Protecting your home-based business and your home
Your homeowners insurance is designed to protect your home and your personal exposure. To ensure you have your business properly covered, here are a few topics to consider.
- How much is your equipment worth? Put together a list of inventory that includes everything required to run your business.
- Will your business create extra liability? Do you take possession of other customers’ property? What if your product is defective?
- Do you stock inventor? If so, make a list of the materials used and completed products you may have.
- Are there any vehicles? If a vehicle that is used for business purposes must be insured.
- Do you have employees? You may need to purchase workers compensation coverage.
- Do you perform work in customers’ homes? If so, a bond may be required.
Now that you have this list of ideas and questions, it’s time to talk to your insurance agent and discuss what option would be best to protect your hone-based business. There are 3 options to choose from depending on your level of risk.
Homeowners Policy Endorsement
This option provides the least amount of coverage, and it not ideal for most home-based businesses. This type of coverage could be an option for a freelance writer with one computer and no customers visiting your home office.
In-home Business Policy
This option is more comprehensive than a homeowners policy endorsement and is a stand-alone policy. This policy would provide higher amounts of coverage for business equipment and liability.
Business Owners Policy, or BOP
A BOP bundles property and liability insurance into one policy. This policy is specifically designed for small to mid-size businesses and will cover your business property and equipment, loss of income, extra expenses and liability. This is the most comprehensive property and liability coverage option. This does not include workers’ compensation, health or dental insurance, but those can be purchased as separate policies.
The best way to ensure that your home-based business is protected is to gather up as much information you can and schedule an appointment with your insurance agent. When provided with all the facts, they will be able to assist you in choosing the best coverage option that will fit into your budget.
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