There are over 12 million home-based businesses in the United States, according to the National Bureau of Labor Statistics. Of those, more than half are underinsured. The primary reason for this is that many home-based business owners believe their homeowners insurance covers their business.
Typical homeowners policies only cover up to $2,500 on the premises. In addition, homeowners policies rarely cover liability arising from a home business. For example, home-based business owners are rarely covered if an individual slips and falls while making a delivery.
In-Home Policies for Business
In-home business insurance policies are affordable. For just a couple of hundred dollars per year, you can insure your business property for $10,000, which includes general liability coverage. If needed, you can purchase up to $1,000,000 in liability coverage.
Should your business be forced to shut down due to the policy’s specified perils (theft, fire, etc.), your in-home business policy should cover lost income and ongoing expenses for up to one year. These policies usually provide limited coverage for valuable documents, accounts receivable, use of equipment and offsite business property.
Business Owners Package Policy
In the state of California, you can also purchase a business owners package policy (BOP). These plans are excellent for home-based businesses that operate in more than one location or manufacture products outside the workplace. Among the items it can include are coverage for personal property, equipment breakdown, computer loss, business liability, personal injury, accounts receivable, valuable documents, business, auto and medical payments.
Insurance companies base premiums on the risk involved. You can lower the risks by keeping your house in good repair, maintaining only a small amount of cash on hand, keeping good records of inventory, having a second set of records kept off-site and hiring employees with good driving records.
Make sure your insurance coverage keeps pace with your business growth. If your business is expanding rapidly, meet with your insurance agent to ensure you still have adequate coverage.
Gregg L. Goodman, LUTCF is the CEO of the Gregg L. Goodman Insurance Agency, Inc. He is an agent for Farmers Insurance and provides life, health, homeowners and auto insurance, as well as commercial insurance programs.
For more information, please call 661-254-6739.