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If you own a small business that you run from home, you might want to consider buying home business insurance. Your standard home insurance policy has extremely limited coverage for your business property, typically no more than $2,500 in business contents, and you likely won’t have any liability coverage for your home-based business.
Home business coverage is a type of insurance that covers your business contents and liability exposures related to your business. You can add this as an endorsement to your existing home insurance policy, or you can buy a separate business owner’s policy (BOP).
BOPs are more expensive than adding a home business endorsement to your home insurance policy. However, it also comes with much broader coverage.
While shopping around with different companies to see which one is the cheapest, it’s also important to compare included or add-on coverage. Some home-based business add-ons could include extra coverage for:
Not every home-based business is eligible for a home business endorsement on your homeowner’s insurance policy. Insurance companies use strict guidelines to decide which type of business is eligible.
Your insurance company will need to review your home-based business to approve this endorsement. It will look at your industry, sales volume and foot traffic volume in your house to determine eligibility.
Common home-based businesses that are eligible include:
Your standard home insurance policy doesn’t cover business activities, both in its property coverage and in its liability coverage, so there’s a chance a claim could be denied without the home business add-on. And if you opt for the pricier business owners policy, you won’t have as many coverage limitations.
Making false statements about the nature or size of your business could potentially negate both your business and home insurance coverage in a claim, so it’s important to be up front with your insurance company.
If your home-based business is eligible, then adding home business coverage to your homeowners policy is a lower cost option than buying a separate business owners insurance policy.
Adding the home business endorsement to your home insurance policy could cost anywhere from $25 to $100 per year, depending on the nature of your business and the type of coverage you need. However, your liability coverage may not be high enough to cover home and business liability claims since you’ll only have one liability limit.
If you buy a separate businessowners policy, or BOP, you can expect to pay anywhere from $250 to $500 a year.
Home business coverage should cover most of your home business risk through its property coverage and liability coverage, except for a couple of cases:
You use your car for business. Your home business policy won’t cover your vehicle for anything related to your home-based business. You can see if your auto policy covers you for your work or buy a commercial auto policy.
You can find a policy to cover your home-based business with a variety of insurance companies, some of the main companies include:
Home business insurance protects your business contents and gives you liability protection for your home-based business. You might be able to add this coverage to your existing home insurance policy. However, there are often strict requirements and coverage limitations.
Otherwise, you’ll likely need to buy a separate business owner’s insurance policy, which costs more but also provides more comprehensive coverage. Compare different home insurance companies to find the best coverage options for home-based businesses.
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