The COVID-19 pandemic has inspired many people to start their own businesses, rather than return to their old jobs. If you’re working out of your home or planning to launch a home-based business, you might not have thought about insurance coverage—but you should.
Your Homeowners Insurance Policy May Not Fully Cover Your Home-Based Business
Your homeowners insurance may provide some coverage for your business, but it will be limited. For example, your policy may cover up to $2,500 worth of equipment or inventory stored in your house. It may also cover equipment and inventory that gets damaged, destroyed or stolen while at another location. If your home-based business relies on expensive equipment, or if you keep a lot of inventory on hand, that amount of coverage may not be sufficient.
A standard homeowners insurance policy may not extend liability coverage to your home-based business. If a client or a delivery person gets injured at your house, for instance, you can be held liable.
An Endorsement May Be Able to Provide the Coverage You Need
If the coverage that’s included in a standard homeowners insurance policy won’t provide sufficient protection for your home-based business, adding an endorsement to your existing homeowners insurance policy may be the solution. An endorsement can provide higher coverage limits for business equipment and inventory. It can also extend liability coverage that will protect you in case someone gets injured while visiting your business.
Depending on the type of business you run, an endorsement may or may not provide enough coverage. If an endorsement won’t suffice, you may need to purchase a separate insurance policy to cover your home-based business.
Communicate With Your Insurer
Every business is unique and every insurance company offers policies that provide different types and amounts of coverage, and have different restrictions. For instance, each insurer has its own rules regarding liability. The number of people who visit your home-based business may determine whether you’ll be eligible for liability coverage.
It’s important to let your insurer know that you run a business out of your home. If you file a claim related to a home-based business that your insurance company didn’t know you were operating, it may deny your claim.
Talk to Your Insurance Agent
An insurance professional can discuss the type of home-based business you operate, figure out what types and amounts of coverage you need, and help you decide whether you should add an endorsement to your existing homeowners insurance policy or buy separate coverage. If you need to purchase a policy specifically for your business, your agent can help you compare rates from several companies.
