A typical homeowners policy only provides $2,500 of coverage for business equipment, which is most cases is not enough to cover all of your business property. You may also need coverage for liability and lost income. There are three basic choices to insure your home-based business depending on the insurance company and the type of business you have.
- Homeowners Policy Endorsement
You may be able to double your standard coverage for your business equipment such as computers by adding a simple endorsement to your preexisting homeowners policy, you can raise the policy limits from $2,500 to $5,000 for as little as $25. Some insurance companies allow you to increase your coverage up to $10,000 in increments of $2,500. There is also the option to buy a homeowners liability endorsement to cover in the event a client or delivery personnel gets injured on your premises. These policies are usually only available to businesses that have few business related visitors.
- In-Home Business Policy/Program
This provides more comprehensive coverage for liability and business equipment compared to a homeowners policy endorsement. These policies vary significantly depending on the insurer. These policies most often reimburse you for the loss of important papers and records, accounts receivable and off-site business property in addition to the protection for your business property. Some will pay for the loss of income in the event of a fire or other disaster where your home can’t be used for a period of time. Some in-home policies allow up to three full-time employees as well.
- Business Owners Policy (BOP)
These have been created specifically for small to medium sized companies and could be the perfect solution for you if your home-based business operates in more than one location. A business owners policy like the in-home business policy covers business equipment and property, extra expense and liability, and loss of income, but on a much broader scale than the in-home business policy. If you do have employees it does not include workers compensation, health or disability insurance so you would need separate policies to cover those aspects if necessary.