Information on Home-Based Business Insurance
If you can handle having a cat in your lap while you work at the computer or the everyday distractions that occur because no ones take’s you seriously, working out of your home might be just the thing for you!
The only downside to working from your own home is that you are an independent contractor and responsible for your own home business expenditures.
Most people don’t think about adding insurance coverage when they decide to work from home. Your homeowner's insurance may provide some coverage but it is usually very limited and probably only relates to your office equipment. It is important for you to be aware that this kind of insurances does not include liability insurance in the event that someone is injured while doing business with you. It is extremely important to have home business insurance if you have clients coming to your house. Even if you don't, it may be wise to beef up your coverage.
So, what are your options?
If you opt to add coverage to your current homeowners policy there are two considerations:
The “business pursuit endorsement” is for when you are working for someone else and do not own your own business, but you occasionally do business from home.
Another option is a “permitted incidental occupancies endorsement” which gives you additional property coverage plus liability coverage. There are also separate home business owner policies. You can ask your agent to put together a package specifically for your own home business.
What kind of home business insurance do you need? Your office equipment alone probably costs more than the amount that your home owner policy would cover in regards to damage, loss or theft. Figure what it would cost to replace all of these items if they were destroyed or stolen. Many home owner policies have a limit of $2000 for claims due to a loss like this. Consider something called “contents insurance” in addition to that covered by your regular policy. Generally speaking your business equipment will only be covered if it stays in your home at all times. If you take your laptop or PDA outside of your home, you will need a “separate contents and property insurance.”
Other considerations depend on what kind of home business you are engaged in. Do you use your car for business purposes? Do you sell a product and are you responsible for its performance or nonperformance, as the case may be? If you provide a service you will need to be covered by malpractice or professional liability insurance. You might even consider insurance to cover your expenses if your find yourself unable to work because of fire, flood or other disasters. If you cover all of the bases, insurance can be really expensive so think carefully and get some professional assistance when figuring out what is best for you.
There are ways to save money on business insurance however, so do your homework.
We’ve already discussed prioritizing your needs and considering what you can safely do without. Look for an insurance package as it is generally cheaper if you get a package deal and pay for just one premium rather than a half a dozen individual ones.
Another suggestion is to consider group rates through a professional or business organization. Start with talking to your home insurance agent and see if they can put together a package for you and then do some comparative shopping. You really must get the insurance that you need, even though it seems expensive now. In the long run you cannot afford not to have proper insurance for your home-based business.