Working from Home? Expand Insurance as Your Business Grows

As more people start their own businesses, many of them start small and run the business from home. In the beginning, it might just be a side hustle to earn a little bit extra on top of their day job salary, but as it grows, your homeowner’s or renter’s insurance may not cover damage to your business assets. Forty percent of small businesses lack adequate business insurance, according to the Insurance Information Institute.

If you are running a small business or working freelance from home, and if the loss of machinery, tools, data, or IT equipment would seriously impair your ability to make money, you want to make sure you have the right coverage.

To safeguard your data, equipment, and operations, you may want to follow these tips: 

Check Your Insurance.
If you are running a home-based business or need more protection for business property that is in your home, you may want to consider purchasing additional coverage. Depending on your needs, you may have a few different options for protecting your business property.

Rider to a Homeowner’s or Renter’s Policy
The most inexpensive home-based business insurance is an add-on or rider that expands a homeowner’s or renter’s policy to cover the company.

The cost of such a rider is minimal—often a few hundred dollars per year—but it generally provides about $2,500 of additional coverage. This type of insurance may be appropriate for a one-person business without a lot of valuable equipment or many business-related visitors, and unlikely to suffer a major loss if unable to operate for a while as a result of fire or other disaster. 

In-home Business Policy
An in-home policy covers a broader spectrum of contingencies, including loss of critical documents or theft of funds being taken to the bank for deposit. Such a business policy, issued by a home insurer or a specialty firm, usually is a plan against injury or theft covering as many as three employees.

You may be able to buy additional coverage to increase the protection your homeowner’s insurance policy provides for business supplies. Some insurers may allow you to increase the limit up to $10,000. Adding this coverage may help cover inventory, such as cosmetics or kitchen supplies, temporarily stored in your home as you’re preparing to sell it or deliver it to customers.

Business Owner’s Policy
Business owners who need more than $10,000 of coverage should pay for a business owner’s policy. This comprehensive policy is the most common type for small businesses and covers:

• Damage to or loss of business equipment and other assets
• Liability for customer injuries
• Loss of critical records
• Malpractice or professional liability claims, and
• Loss of income or a business interruption in the case of a power outage or a natural disaster.

Other Coverages
Depending on your business, you may need additional coverage. If you have employees, you may need to secure a workers’ compensation policy.

If you provide professional services, you may also likely need a professional liability policy.