It seems pretty obvious that when you own a business located downtown, you need separate insurance to cover liability, losses and other issues that may arise. However, when you are running a home-based business, it is easy to assume that your homeowner’s policy covers whatever happens. This, however, is not always the case. You might be surprised to find that your home business and related activities are not included in your homeowners policy.

Photo: Adam Foster

Types of Home-Based Business Insurance

Of course, you will want to look at your homeowner’s policy, and check with your insurance agent, to see what your options are. In some cases, you can purchase a rider that will help cover your home business activities and equipment. Or, you may have to purchase a separate policy. In any case, it is important to know exactly what your homeowner’s policy covers. In some cases, if you don’t let your insurance company know what you are doing with your home, you can actually have the policy voided altogether if it comes out during the claims process. Here are some types of home-based business insurance to consider:

  • Contents insurance: This is insurance that covers the equipment you use in your home business. It might be your computer, your fax machine, your desk or any number of items. In some cases, your homeowner’s policy might cover some of the cost, but you need to be aware of the limits to coverage. Even if your policy does cover your home business, you might find that the coverage limit is insufficient to replace your home office if it is destroyed or equipment is stolen.
  • Liability insurance: You know that your homeowner’s liability coverage will take care of problems if a family or friend is hurt on a visit. However, if a client comes to your home office, your homeowner’s insurance company may not injuries that come from a slip and fall. If you frequently conduct in-person meetings at your home business location, you might consider this home-based business insurance coverage.
  • Product liability: There is practically no way that your homeowner’s policy will cover liability that comes as a result of your product. If you are concerned about your product, you  might want to think about getting this insurance.
  • Professional liability: If you are in a profession where you give advice, or offer services that could result in some sort of damage to a client, this is something to give some thought to. Common types of professional liability insurance include malpractice insurance and errors and omissions insurance.

It is also a good idea to review your auto insurance policy to see whether you are covered when using the car for business purposes.

You may not need any of these home-based business insurance policies. Depending on what your homeowner’s policy covers, and what products and/or services you offer as part of your home business, your needs will differ from someone else’s. As a freelance writer, my needs are few. But it is a good idea to double check on your policy coverage, and make sure that you and your home business are truly protected.