Make sure your home-based business is insured

As you put together your business plan, remember to include insurance even if your business operates from your kitchen table.

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Published: February 13, 2013
Updated: November 09, 2015

At last you’re ready to be your own boss and launch your home business. You may have registered your business, developed a business plan, and set aside money to get started. But before you hang out your proverbial shingle, you should take steps to make sure your business is properly insured.

Don’t assume your homeowners insurance covers your home business. Standard homeowners insurance may provide some protection for business equipment, but coverage varies by policy and it may not be enough. In addition, your homeowners policy won’t cover your business if a customer or supplier is injured on your property or while using your product.

"Don’t assume that your homeowners insurance covers your home business."

So what can you do to protect yourself and your home business?

  • Add an endorsement to your homeowners policy – Your insurer may offer an endorsement to your homeowners policy that adds additional property coverage and some limited liability coverage. For less than $20 a year you may be able to double your standard policy limits for business equipment from $2,500 to $5,000.

  • Purchase a business owners policy (BOP) – Many insurers offer business owners policies combining three of the most important types of business insurance coverage: property insurance, business interruption, and liability insurance.

Other types of insurance to consider

  • Commercial auto insurance: Just as your homeowners insurance may not sufficiently cover your home business, your personal auto insurance policy may not be adequate for your business operations. Whether your business owns and operates a fleet of pickup trucks or a single car, all vehicles primarily used to conduct business must be protected with commercial auto insurance which will likely include a combination of bodily injury, property damage, collision, and comprehensive coverage.

  • Workers’ compensation insurance: With its ever-changing statutes and regulations, workers’ compensation insurance is likely the most complex coverage you’ll buy for your business. And because workers’ compensation requirements vary from state to state, check with your state insurance department or work with an insurance agent who is licensed and familiar with your state’s regulations to determine if you are required to provide workers’ compensation insurance to your employees.

  • Liability policy: An umbrella liability policy is extra protection that takes effect when lawsuit-related costs exceed an auto or general liability policy’s maximum coverage limits. This versatile coverage may be purchased in increments, so you can buy the coverage you need now and increase your limits as your company grows.

Make a plan

Build business insurance into your overall business plan and align your insurance with your business’ long-term growth strategy. A sound business plan includes coverage that provides the protection you need today yet can easily expand to grow with the changing needs of your home business. Talk to your insurance agent, or contact Wells Fargo Insurance to discuss your business coverage needs.