The U.S. Small Business Administration reports that there are 29.6 million small businesses in the U.S. of which 52% are home-based — and this trend is only expected to increase, according to Network Solutions Small Business Index research. We even have a new word for this vital rising demographic: “homepreneurs” — but some home-based small business owners make the dangerous assumption that their homeowners insurance will cover their business needs. In fact, it’s critical to consult with your insurance rep to understand the limits of your homeowner’s insurance in regard to your home business.
For example, many homeowners policies provide a maximum of $2,500 coverage for business equipment (computers, fax machines, etc.) in the home — while your actual investment may far exceed this figure, so you may need business property insurance to adequately cover equipment and any inventory. Additionally, depending on the nature of your business, you may require liability insurance: “If you are sued because of your home-based business activities — the company that hired you as a consultant believes your advice was dead wrong; the computer equipment you “fixed” doesn’t work; the cookies you baked made someone ill — your homeowners policy won’t protect you.”
Finally, you may want to insure against loss of income in the case of fire or natural disaster.
If you are like millions of other home entrepreneurs, your business is too important to risk with sup-optimal coverage; here are some items to consider when consulting with your agent:
- Equipment and furniture
- Business items belonging to others in your care
- Accounts receivable
- Important records, documents and reference material
- Electronic data
- Liability for personal injury, products, services and contractual obligations.
- Auto — be sure your existing policy covers all business uses
And you may have special considerations for disability, life, and health insurance. Your agent can help tailor your coverage to your specific needs, and protect your important home business. See also, our Small Business Insurance Tool Kit.