The Small Business administration reports that 50 percent of small businesses are home-based. If you count yourself as part of that 50%, you better know what kind of business insurance you need. Technically, you work from your home, so your homeowners insurance covers your belongings. However, homeowner insurance was never meant to cover all the parts that businesses have, so you better know what your options are when it comes to protecting your business.
There are three types of insurance, that will be helpful to have if you run an in-home business: An in-home business policy, a business owner policy (BOP), and a rider to a home policy. These will help cover most situations and will also help cover you if your business were to grow to include employees or other business expansion.
1. In-home Business Policy
An In-home business policy provides coverage for injury and theft up to 3 employees. They tend to cover up to $10,000 worth of losses and average somewhere between $250-$500 a year on average. This is similar to how a homeowners insurance policy provides coverage for injuries and theft, but this one specifically covers your business and therefore will not affect the liability coverage limit on your homeowners insurance policy. Most of this insurance operates on the idea that your business and home should be separate even though they are, technically, the same place. Using that mindset helps provide perspective about many types of coverage.
2. Business Owners Policy
A Business owners policy, or BOP is not just essential for those who have home business, but for most small business owners period. This policy provides all the basic needs of any company. At a cost of less than $50 a month, you can insure your business for over the $10,000 limit mentioned before. This package is meant to be comprehensive and provides coverage for professional liability, employee, contractor, or customer injury, loss of income, business interruption, and even driving a car for business in some cases. If you grow, then this policy will be especially helpful as you move up in size and scale.
3. Rider on Homeowners Policy
The most inexpensive form of business protection is a rider on your home policy. This is typically an add-on to your homeowners policy that helps cover something business related. For example, if you use a computer mostly and don’t have customers coming directly for your house, then you do not need a huge business policy. However, a small rider to cover deliveries for your business or for an expensive computer or something in that vein could cost you less than $20 and cover you for thousands of dollars. Choosing what is right for you is all part of being a business owner.
No matter what you choose, talk to your homeowners insurance agent to find out what is covered, what isn’t, and what option would work best for you!