Slightly more than half of U.S. businesses are home based, and people who run businesses from their own homes often assume that their homeowners insurance provides sufficient coverage.1 This misconception may expose them to a considerable amount of risk.
With standard homeowners insurance, the coverage for business equipment such as computers is often limited to $2,500, and business liability is typically excluded altogether, so it's easy to see how the owner of a home-based business could end up underinsured. Fortunately, some options are designed to help protect your venture and your income.
If your business activities are somewhat limited, a basic rider or endorsement that expands the policy limits for business property losses can sometimes be added to your existing homeowners policy, which might be adequate for your situation. However, your insurer may require additional liability protection if business-related visitors come to your home.
In-home business insurance policies provide comprehensive coverage that is tailor-made for businesses that operate out of a residence. They may include the following specific types of coverage.
You may want to check with the local authorities or an attorney to verify that it is legal to run your particular business in your home, because if you are not in compliance with all regulations, your coverage could be voided.
Finally, auto insurance policies often exclude accidents or losses that occur while you are conducting business activities. You should also consider business vehicle coverage if you plan to use your automobile for deliveries, client visits, or any other business purpose.
1) U.S. Census Bureau, 2016 (most recent data available)
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