Here’s a sobering statistic for you. The Insurance Agents & Brokers of America, a trade association, conducted a survey of people who run a business from their homes. Forty percent incorrectly believed that their homeowners insurance would provide any coverage they needed. Coverage for what, you say?
Oh, the UPS guy slipping on the front porch delivering a business-related package and suffering a broken leg. Or maybe a fire in the garage that destroys your spring inventory. Or any one of a hundred other scenarios you can cook up.
If you run a business from your home, you need home business insurance. You cannot rely on your homeowners policy to cover your needs because that is not what that policy is designed to do and the insurer is perfectly within its rights to deny benefits.
You may be able to add a business endorsement to your homeowner’s policy for as little as $25 a year, but it will likely provide only limited coverage. Generally such endorsements will extend to computer equipment and may cover minor “slip and fall” type accidents.
In-home business policies go a step beyond that and may include coverage for lost computer data and a degree of business liability. Expect to pay about $250 to $500 a year.
From there, the next step up is a business owner’s policy (BOP), which may or may not be more coverage than you need.
Bottom line? If you run a business in your home you need to have a consultation with your insurance agent and figure out what level of coverage is appropriate. If you’re a writer sitting at a laptop all day, then you want that machine and maybe the data it contains covered. If you have a product-based business, you need protection for your inventory and perhaps some liability to cover the deliverymen who are likely on and off your property routinely.
You cannot know what level of coverage will work for you until you do your homework, but you can assume, with 99.9% accuracy that your homeowners policy offers zero protection for your home business.