The Right Type of Insurance for Home Based Businesses

If you think that your new home based business does not need to be insured separately, since you already have homeowners’ insurance, you have another think coming! Most homeowners’ insurance policies limit loss of business property to $2500, do not cover losses away from home and exclude liability coverage for business-related activity. How’s that for protection!
But before you buy that insurance, assess your needs and get quotes from a number of companies to determine the amount and type of insurance suitable for your business needs. Incidentally, most businesses go in for property and liability insurance.
Property Insurance – As the name suggests, this type of insurance covers your business for damage or loss to physical property. A comprehensive property insurance policy should cover equipment and machinery, office furniture, computers and accessories, inventory and supplies, fixtures such as lighting systems or carpeting and the actual building structure occupied by your business. Make sure you understand the coverage limits on various policies, any deductibles or co-payments that may be required and how the insurance company pays claims.
Liability Insurance – Liability coverage protects your business against lawsuits arising from personal damage or injury that has occurred on your premises. Your homeowners' or renters' insurance may not protect you against liability to business visitors. A general liability policy covers damages that your business is ordered to pay to an individual who is injured on your property.
If you sell manufactured or assembled goods, you should consider taking product liability insurance. This type of insurance protects you in situations when the product you sold creates or is perceived to have created harm or damage to the buyer. On the other hand, if you’re a professional, such as a doctor, lawyer, architect, computer consultant or realtor you should also consider carrying professional liability insurance.
In addition to the type of insurance discussed above, you should also consider commercial auto insurance if you use a vehicle, even if it is your private car, in the course of operating your business. It covers damage that you or an employee may cause in a business-related accident. Similarly, make sure you insure all employees' personal cars that are used for business purposes. If your business has employees, you will also need workers' compensation insurance which covers their injuries on the job.
Several insurance companies have special “package” policies that cover both your home and a business that is run from there. Typically, these policies cover computer equipment and other business property, whether used in your house or elsewhere and protect you from business liability lawsuits and loss of income. These types of policies usually cost less than either adding riders to your home insurance or buying separate policies for home and business. Since there are lots of options to choose from, it’s a good policy to shop around a bit to get the best value from your policy.