Does my home insurance cover my home based business?



Does my homeowners insurance cover my home based business?

Good question!  As with many insurance questions the answer is yes, and no.  There are several things to consider when starting a business from home.

Business property

At your home

Property purchased by your business has very limited coverage on your personal homeowners policy.  Property used only by your business is also limited. Home insurance provides a small amount of coverage that is typically no more than $5,000.  Business software is usually excluded.  If you purchase expensive software to run your business do not rely on your homeowners insurance for coverage.

Off Site and On the Move

Home policies provide coverage for your contents anywhere in the world.  Unfortunately, your business owned property is not considered personal contents.  Coverage is even more limited, or non-existent, when it comes to business property that is away from the home.

 

Business liability

At your home

If customers are coming to your home you need to contact your agent immediately.  Home insurance policies provide PERSONAL liability for the policy holder.  It does not provide business liability.  When customers come to your home it increases the potential for claims.

Off site

When you are off site meeting with your customers there is a possibility you may cause injury or property damage.   Personal liability provided by your homeowners policy will not respond in the event of a business liability claim.

 

SPECIAL NOTE – Separate Structures

Homeowners policies provide coverage for other structures located at your home address.  Separate structures, at your home address, used for any kind of business purpose, are excluded.  This excludes the building ENTIRELY from your homeowners policy.  Each policy contract is different, but simply storing business property in a detached shop can trigger the exclusion.  

Options

  • Fill coverage gaps with an In-Home Business policy.
  • A business owners policy (or BOP) is another excellent option.  The premiums are based on the property coverage limits selected which makes this a nice option for a start up business venture.
  • Some home insurance carriers offer ways to add coverage for business property and liability directly to the home insurance policy.

Talk to your agent today about your home business insurance needs.

 


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