Many people do not realize that their home insurance policy does not cover their business property or pursuits properly. Most policies restrict the amount of coverage on business property to $2,500 or less. Liability for invitees, guests or clients, of the business may be excluded.
In response to the growing number of homes that have businesses operating in them, insurance companies are coming out with endorsements to provide coverage. The scope of the business pursuits is still limited. In home offices and studios are the primary focuses of these endorsements. Individuals doing manufacturing of any kind, operating an automobile repair or body shop or even a bed and breakfast would need to obtain a regular commercial insurance policy.
When adding on coverage for an in home business, you will need to total up the value of the equipment that you use: desks, computers, laptops, chairs and other office equipment that you use in the course of working. This figure is your business personal property amount. This will be listed on a different line on the policy than the household contents.
Liability coverage is endorsed onto the policy. The charge for this can vary from a few dollars to several hundred dollars. This charge is determined by the nature of your business. For in home offices that have no clients coming to the home, the liability charge will be small. An example of this would be a technical writer who works on their home computer and occasionally goes into the company office. The liability charge would be higher for a business that sees many clients in the course of a day. An example of this would be a chiropractor who sees clients in an office in his home.
When discussing liability, always remember that the coverage provided by the home insurance is premises liability only. Professional liability, sometimes referred to as Errors & Omissions or Malpractice, is a completely separate issue. In the case of the chiropractor, they would need to purchase a medical malpractice policy to insure against claims arising out of improper treatment. Premises liability covers injuries sustained by being on the property and professional liability covers errors or injuries caused by you performing your job.
If your in home business has any employees, you will be required to have workman’s compensation insurance. This provides medical benefits coverage for an employee that injures themselves in the course of doing their job. This coverage is state regulated, so you will need to check your state’s laws to see when this type of policy is needed and who can be covered under it.
Commercial automobile insurance may be needed if you use your car in the course of your business. Deliveries of mail, newspapers or other goods are not automatically covered by your standard auto insurance policy. Driving from one job site to another may also constitute a business use of an automobile. Some auto insurance carriers will allow you to change the use of the car from personal or pleasure use to business use. Many companies also allow this for rural route mail carriers. If your personal auto insurance carrier will not cover your vehicle use, a commercial policy can be obtained to provide the coverage you need.
An umbrella liability policy may also be a valuable addition. You can find policies that are just for the business, just for your personal coverage and umbrella policies that cover both under the same policy. This would provide an extra layer of protection for you if a claim arises.
This addresses the lines of insurance commonly needed for in home businesses. Remember to tell your insurance agent what sort of business you are running from your home. This way your agent can provide the right types of insurance coverage for you.