Small Business Matters

Your Home-Based Business Needs Insurance Protection, Too

If you operate a business from your home, it’s important to understand that a homeowners insurance policy is designed to cover personal exposures, not business exposures. That being said, knowing which insurance coverage is right for your home-based business depends on a variety of factors.

To make sure you’ve got all your business insurance bases covered, you’ll want to review your property value and business exposures. To get started, consider these questions:

• How much is your equipment worth? Conduct an inventory, listing everything you use to operate your business.
• Does the service or product that you provide create extra liability? For example, what if you made an error or omission? Do you serve alcohol? What if your product is defective? Do you take possession of your customers’ property?
• Do you stock inventory? If so, make a list of the materials and products that you sell and, if you do any of the manufacturing, the materials used to make them.
• What about vehicles? Any vehicle used for business purposes must be insured, even if it’s personally owned.
• Do you have employees? If so, you need the appropriate workers’ compensation coverage as required by the state.
• Do you, or your employees, perform work in customers’ homes? If so, a third-party fidelity bond will pay for losses due to fraudulent acts, such as theft.

Selecting a Coverage Option

Based on your business needs, you have three basic coverage options to choose from, depending on your level of risk:

1. Homeowners Policy Endorsement: This provides the least amount of coverage, and therefore isn’t ideal for most home-based businesses. While it may provide enough coverage for a profession with no business foot traffic, it’s not enough for someone who employs others, has clients visiting his or her home, or has valuable business equipment and/or inventory.
2. In-home Business Policy: More comprehensive than a homeowners policy endorsement, in-home business coverage is a standalone policy that provides higher amounts of coverage for business equipment and liability.
3. Business Owners Policy (BOP): A BOP bundles property and liability insurance into one policy. Created specifically for small- to mid-size businesses, a BOP covers your business property and equipment, loss of income, extra expenses and liability. It’s the most comprehensive property and liability option. It doesn’t include workers’ compensation, health or disability insurance, which are available as separate policies.

Talk to a Business Insurance Leader 

VTC Insurance Group can help you review your property value and business exposures. Based on that information, we’ll help you select a coverage package that’s as unique as the product or service you provide. You can reach us at 248.828.3377 or visit vtcins.com.

 This blog is for informational purposes only and is not intended as legal advice.