Many entrepreneurs are starting small businesses with full or part-time business operations being conducted from their homes. Even though they are very creative in their own specialties, many have the misconception that a homeowner’s policy will adequately meet business insurance needs.
The Insurance Information Institute warns business owners to not assume that a homeowner’s policy will cover a home business. If a home policy provides any insurance coverage, it will be very limited and there will be no coverage for business-related liability.
Some guidelines to help home business owners properly insure their business include:
Adding a home business endorsement to existing homeowners policy
Some insurance companies offer particular insurance coverage endorsements that can be attached to a home insurance policy. For example, there may be a home day care endorsement or an incidental business operation endorsement. Endorsing a home policy can be an inexpensive means of insuring a home business and may provide the minimum amounts needed for a start-up business. As the business grows, the insurance need will more than likely exceed the insurance coverage provided. It is best to discuss your business and your insurance needs with your agent so that your business insurance program provides adequate protection.
Purchase a Business Owners Policy (BOP)
A business owners policy is an insurance package that combines property and liability insurance in a single policy. This is a more comprehensive policy designed for smaller businesses. Even though a BOP provides a higher amount of property and liability coverage than an endorsement to a home policy, it still has its limitations. Coverage normally provided by a BOP includes: property insurance for buildings and contents owned by the business, business interruption insurance to cover loss of income resulting from an occurrence that disrupts business operations, and liability protection to cover the legal responsibility of the business for harm caused to others. Business owner policies do not provide insurance coverage for business operation of a vehicle or professional liability.
Stand Alone Commercial Auto, Commercial Property and Commercial Liability Policies
Even though individual policies may be more expensive, they are specifically targeted to an individual insurance need and offer the most comprehensive insurance protection. Large lawsuits are just a fact of life in today’s economic times and probably the most important insurance policy a business can buy is a commercial liability policy. The amount of coverage needed by a particular business will depend of several factors including: the type of business, the size of the business, and the degree of interaction with prospects and current customers. All business vehicles used in the normal course of business should be insured under a commercial auto policy. A home business that provides licensed professional services, like an insurance agent or an accountant, will require professional liability insurance to cover potential liability risks due to their professional actions.
As your home business grows, it is very important to keep in touch with your insurance agent. If you neglect to keep your business insurance program up to date as equipment and inventory become more extensive, you may find that policy limits are far below the value of your business property or liability exposure.
Please feel free to contact us to see the Strategic difference. You and/or your company will not be disappointed. We look forward to serving your insurance needs.