Do I need insurance for a home business?
The line between homeowners insurance and business property insurance can be blurry if you have a home based business.
Your homeowners policy may provide some coverage for your business property, but limits are typically low. You might not have enough coverage if the value of your business property is more than a few thousand dollars.
Home business insurance can help protect the things you need to run your company, typically with higher limits than homeowners insurance.
Business insurance can also offer additional protection homeowners insurance doesn’t have.
What does homeowners insurance cover?
Homeowners insurance is meant to protect your home and personal possessions.
If your house burns down in a fire or a tree comes crashing through your roof, the insurance company can help you cover costs to repair or replace your personal belongings and the physical structure of your home.
Many homeowners insurance policies only cover business property up to $2,500.
So if that same tree comes crashing through your roof and destroys the equipment you use in your business, the insurance can only reimburse you up to the policy’s limit for business property.
If you only need a laptop and some basic office supplies, that might be enough.
You might need business insurance if you have more than $2,500 in business equipment at your home
If you have expensive business equipment, office furniture or inventory stored in your home, you might need more coverage than what your homeowners insurance can provide.
For example, let’s say you have an online business and use extra room for your home office and inventory storage for the products you sell online.
If an electrical fire destroys your business computer, printer, desk and all of your inventory, your homeowners insurance might not reimburse you for everything you lost.
Commercial property insurance could provide more financial help if you purchase a policy with higher limits.
Business property insurance for home businesses
Commercial property insurance can help protect the things you need to do business. Plus, it can cover items not included in homeowners insurance policies.
Here are three types of coverage commercial property insurance offers that can help protect your home business:
- Goods, gear and inventory (also known as business personal property insurance): Helps cover the stuff you need to do business, including computers, furniture, equipment, custom upgrades, inventory and more.
- Business income coverage: Business income insurance can help cover loss of income if you need to temporarily stop your business operations because of a covered event such as a fire or burst water pipe. This is sometimes called business interruption coverage.
- Equipment breakdown coverage: Can provide financial help after mechanical failures, such as short circuits, power surges and loss of air pressure, that cause a piece of equipment to malfunction.
