Home Based Business Insurance

Home based business insurance is needed by everyone who has a business they operate from their home.

Too often obtaining a business owners policy (BOP) and/or errors and omission (E&O) insurance is ignored by many startup entrepreneurs.

Since money is often tight during the initial startup phase of home based businesses, insurance is not given much thought.

What Are Your Insurance Risks?

A part of your business planning should include ascertaining your business risks. Do you have customers visiting your home office? If you do, do you have insurance coverage for injuries caused by slips and falls or other types of injuries?

Do you have business equipment? Computers, printers, fax machines, and business data? If you don't have insurance, you are self-insuring yourself. That means, if there is a fire, you get to pay for its replacement.

Fire is almost always an expensive loss. Your business data may be irreplaceable. If you run a business out of a converted barn/garage on your property, your home owners policy does not cover business structures or lost business data.

Do you have employees? Do you have business vehicles? What about loss of income? What about theft? Each of these have their own specific risks involved. Be sure you buy the proper coverage for your situation.

Your home based business insurance should cover the risk potential your business is exposed to. Do you make a product such as software?

Do you give advice such as trading advice or a financial planner? Do you build websites for clients? If you do, you need an errors and omission (E&O) insurance policy.

This is a type of liability insurance that protects you from law suits over mistakes (errors & omissions) you may make. I bought this insurance when I was in the lawn business to protect me from damaging a customer's property with my equipment.

Types Of Home Business Insurance

There are three types of policies you can purchase for your home business. They are:

1. Home insurance endorsements
2. Home office policy/in-home business policy
3. Business owners policy

The policy that you choose should cover the risks you are exposed to.

The business owners policy is the most comprehensive and gives you the best coverage for your home based business. Consider this policy if you manufacture products, you are exposed to professional liability, or have a freestanding building for your business.

The home office policy is a home owners policy with a business policy combined into a single insurance coverage. This policy is designed for the home based businesses that do not have high risks.

The third policy is the home insurance endorsement. This is a rider you can add to your existing home owners insurance. While this type of policy is the least expensive, it also gives you the least protection. Do not buy this policy if you make wedding cakes where someone could become sick from eating your cake.

If you don't have visitors to your home office, you don't make a product, or give advice, nor do you have employees, or own any expensive equipment, then maybe this policy will suffice for you.

My best advise is to contact your friendly insurance agent and discuss your personal situation. I believe it is better to have more insurance than you need, than to not have enough and wish you had more when you are sued.

Your home based business insurance does not cover every risk. You may need additional insurance policies to supplement your home based business insurance. You may need workers compensation, commercial vehicle, and professional liability insurance.

Return from Home Based Business Insurance to Self Employment Deductions.

Return from Home Based Business Insurance to Legitimate Home Business.