According to the U.S. Small Business Administration, more than half the businesses in the country are home-based, with an estimated 38 million home-based businesses currently in operation. If you have one of these home-based businesses and are under the assumption that your standard Greensboro homeowners insurance policy is providing you adequate insurance protection for your business, you may be mistaken.
Based on data from the Insurance Information Institute, a typical homeowners insurance policy provides about $2,500 of coverage for a home-based or cottage industry business. This may be enough to cover the damage, theft or destruction of some of your equipment, but doesn’t provide enough to cover lost income, lost data or a potential liability suit. For these, you need insurance protection specific to home-based businesses.
Insuring Your Home Business
Home-based businesses have always been popular, but have become even more so with the advent of home computers and the Internet. Today, millions of people have figured out how to make a living working out of their own homes, but many haven’t even given a thought to how a home-based business affects their insurance needs. All too often the topic doesn’t come up until there’s a loss and you find out that your standard Greensboro homeowners insurance policy doesn’t cover you for the business losses you’ve suffered.
The same may be said for your standard vehicle insurance if you have an incident while using your car or truck for business purposes. Insurance companies want to know when business is being conducted out of your home or if your car is being used for business purposes. Not disclosing this fact could potentially result in a claim denial.
What Insurance is Needed
For some small home-based businesses, existing homeowners insurance may be enough to cover a modest amount of business equipment and/or business property. Think of a Mary Kay or Tupperware distributorship.
It’s not unusual for a homeowners policy to provide about $1500 worth of personal property protection for business equipment and/or property, with half that amount of coverage for business property that’s away from your home. An alternative to this minimal amount of coverage would be to take out a policy endorsement that raises coverage amounts.
Some insurers can provide what’s called an in-home business endorsement. If you have customers or clients coming into your home, liability coverage is an important consideration. The best option here is a business insurance policy.