You might have set up a business in your home to generate surplus money for yourself. Yes, it's completely legal and you can have all the advantages that go along with it. Work on your own terms, don't need to be afraid of getting terminated at all, invest as much capital as you want etc. etc. But if you think that your home insurance is going to cover the risks for the business as well, you're absolutely on the wrong track. Again you're terribly mistaken to think that just because the business is on your own property, it has less risk than the conventional business companies. Risks associated with a business don't depend on wherefrom it's run.
How home insurance provides protection to business properties?
A home based business is minimally covered by the home insurance policies in the following ways:- Homeowner's insurance might cover your personal properties if they are used for business purposes. However, the coverage is also limited. Compensation of $2,500 is usually allowed for on-premise protection and if any business personal property is damaged away from home, mere $250 is provided.
- Insurance protection will not be available for business data, like records, documents etc.
- Compensation is not provided if you're charged for libel or slander i.e. for defamation of any individual or organization.
- Home insurance policies won't pay if any individual, visiting for business purposes, gets hurt, even if you're responsible for the injury.
Which insurance coverage is necessary for a home-based business?
Since home insurance offers limited protection, the only way-out for you is to get a separate insurance coverage for your business set-up – however small that might be. Home based businesses need to have the following insurance coverage:- Loss-of-Income Insurance
- Business Personal Property Insurance
- Personal and Advertising Injury Insurance
- On-Premise Liability and Off-Premise Liability Insurance
- Errors and Omissions Insurance (for certain types of business or professional service providers)
How can you get insurance protection for home-based business?
You can make use of the below mentioned alternatives to protect your business against the unpredictable future damages.- Endorsements or riders - You can include your business properties under your homeowner's insurance policy, with the help of a rider or endorsements. This increases the coverage limits of your existing policy and allows you to include the contents or equipments that you use for business purposes.
- In-home business insurance policy - This kind of policy ensures protection for your business properties, equipments and data. Along with that, it also covers losses from fire and theft, business and personal liability and loss of income. The liability coverage through kind of policy has much wider scope and will provide compensation, if any of your product or service causes injury to other individuals. It might also cover the relocation costs, if you have to operate your business from elsewhere, due to property damage etc.
- Business owner's policy - This form of policy ensures comprehensive coverage for your business. It provides protection not only to the business structures, property, equipments, data etc, but also compensates for loss of income, loss due to fire, crime or theft, personal injuries, premises liability and the rest.
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