Home-based businesses are becoming increasingly prevalent, thanks in particular to the relatively inexpensive technology available at our fingertips. Yet running a business out of your home changes the loss exposures and characteristics of your residence as far as your homeowners insurance company is concerned.
Your homeowners policy will cover losses to the property caused by perils such as fire, wind, lightning, and theft. And the liability portion will pay if someone is hurt on your premises. But if you run a home business, any loss associated with that business may be your problem. What if you had a small fire that damaged your home business office and computer and resulted in some lost income? Once your insurance company sends an adjuster and he or she discovers the business, your claim could be denied.
Conversely, if you purchased a home-based business endorsement to your homeowners policy or a businessowners policy (BOP), your entire loss would likely be covered, even the loss of income.
And do not forget about liability. If you have business visitors in your home and they get hurt, the standard homeowners policy may not cover those injuries. Again, you need to purchase the correct endorsement to the homeowners policy or a separate BOP. Also, any professional liability coverage will not be covered under either of these approaches. A separate professional liability policy will need to be arranged for this loss exposure.
Different insurance companies have different criteria for excluding businesses from their policies. And they offer an assortment of coverages for this exposure. Specific coverage available under one insurance company may not be available with another.
The key thing to remember is this: if you are running a business out of your home, inquire about available coverage options to properly protect your business and your assets.