If you run your business from your home — which is becoming more common as the COVID-19 pandemic forces more and more people to work remotely — you may be wondering if your homeowner’s insurance will cover your business. According to the Insurance Information Institute, a standard policy usually only offers coverage for about $2,500 of your business equipment, which may not be enough coverage, depending on your specific business.
Depending on your business type, you will likely need some sort of liability insurance, and if you make food products or personal care products, you may need a special policy. There are three basic choices for insuring a business from your home, depending on your specific business type and your insurance company.
Homeowners Policy Endorsement
This is an endorsement that you add to your existing policy to cover your standard equipment. It usually covers about $2,500 for a business, which is perfect if your business does not need anything beyond a couch and a laptop. You may also have the option to increase the coverage amount to $10,000.
You may also add liability to this coverage, which you will need if you have people visiting your business. If someone slips on the icy stairs entering your home business, they can sue you, and that is where the liability comes in handy.
In-Home Business Policy/Program
If your business is much more than a couch and laptop, and you need more comprehensive coverage, this is the ideal policy for you. If you are trying to decide if you need more coverage than a homeowners policy endorsement, there are some questions you can ask yourself to help make the decision:
- “Do customers or clients come to my home?
- “Do I keep inventory or supplies in my home or at off-site job locations?
- “Would I lose income if I had to close my business because of damage to my home?
- “Do I have employees working in or outside of my home?
- “Do I maintain client or employee records on my computer?”
If you answered yes to these questions, you may want to consider this type of insurance instead of relying on the homeowner’s insurance.
This type of policy will vary depending on your insurance company and your specific business. The liability coverage is usually broader in these policies, to offer you better protection. This policy also usually covers business materials stored in another structure on the property, like a shed or garage.
Some will cover business interruption if your home becomes damaged in a natural disaster or a fire, as well as extra operating expenses in a temporary location. Some will also cover up to three full-time employees.
This is for a small or mid-sized business that will cover your business property and equipment, loss of income, and liability. Coverage may even extend to your business property outside of the home if you open a small office or rent a storage unit for backstock.
It does not include worker’s compensation or insurance for health or disability. You will need separate policies for these if you have employees.
“Home Based Business Insurance.” The Hartford, www.thehartford.com/home-based-business-insurance.
Insuring Your Home-Based Business. Insurance Information Institute, www.iii.org/article/insuring-your-home-based-business.