If you are just starting a home-based business or contemplating that endeavor, you need to make sure your coverage is adequate and doesn’t have any holes that may jeopardize your financial stability, not to mention your business. Working out of your home has many perks but it’s essential your home-based business is properly insured and that all your coverage needs are met. Is your home-based business protected?
What Types of Home Businesses Need Separate Insurance Coverage?
Some people may think their homeowners insurance policy can provide adequate insurance protection for their business, but if you run a business out of your home, you may find that the coverage provided under a typical homeowners insurance policy can leave you with a sizable coverage gap in regards to your business equipment and liability.
If you are wondering whether you need home-based business coverage, you can take into consideration the following factors:
- The amount of business equipment- If your business equipment exceeds $2500, you will need additional coverage.
- The number of clients/customers or employees that will come onto your home property– If your business entails people coming and going as part of your business practice, you will need additional coverage. Your typical homeowner’s insurance policy will not provide liability protection for customers who get injured on your property in the “scope of business.” Can you afford a lawsuit from a customer or employee who slips and falls on your property?
- Providing services/products- If your home-based business involves selling a product or provides a certain type of specialty service, can you afford a lawsuit if one of your products injures a customer? How about if your customer is dissatisfied with your service or product? If you are in the market of providing products and services, you will need additional protection.
- Size of your home-based business- Every business is different with varying degrees of needed protection so make sure you consider the size of your business. If it is medium to large sized, you do need additional protection.
If you are still in doubt whether you need separate coverage for your home-based business, it is recommended you contact your local Alabama independent insurance agent to ensure you are adequately protected for all your unique business needs.
Below Are 3 Different Types of Coverage Considerations for Your Home-Based Business
- Your Homeowners Policy- A typical Alabama homeowners insurance policy may be adequate to protect your business if it is small, very limited in office equipment, and you won’t have customers coming onto your property. Keep in mind that if a customer gets injured on your property, there will not be coverage. There is limited coverage for business equipment ($2500) so if you have more than that, you will need to get an endorsement to your current policy to extend coverage.
Also, if you are storing a lot of important business documents and client information at your home and something happens to them (fire, theft, etc.) there is no coverage for that under your homeowner’s insurance policy.
- Home Business Policy- This type of insurance policy is best suited for medium-sized businesses. This coverage is designed to offer both property insurance along with liability protection so that if someone comes onto your property in the “scope of business” and gets injured, you will have coverage up to your limits of liability.
- Commercial Insurance Coverage- If you have a large business (annual revenue exceeding $250,000) with over 3 employees, you will need a commercial/business owners insurance policy to adequately protect ALL your coverage needs. BOP coverage includes both business property protection and general liability coverage.
If you are contemplating a home-based business or just starting up, contact us at Burkett & Associates so we can help. We understand each business is unique with a unique set of needs. We can work with you to provide the right type of insurance protection suited for your specific home-based business, all at a cost you can afford. Call us TODAY at 256-704-7400 so we can assist with all your Alabama business needs.
