Bridging the Gap Between Home and Business Insurance

Erika Remmington

August 22, 2014

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Do you plan to start or already run a business based from your home? Approximately 18 million Americans do-- but what 60% don't know is they are tempting fate on the future of their business every day. As it turns out, many home-based business owners wrongly assume their homeowners insurance will cover the business side of their property, too. In reality, most homeowner policies limit coverage of business-related possessions to $2,500, won't cover losses outside of the home, and don't include liability coverage for any business related actions or accidents. This renders the average home business essentially unprotected. What can you do to ensure your livelihood is safe?

First, start by assessing your needs. Take a minute to carefully read through the terms of your homeowner's insurance and find any conditions relating to business activity and possessions. Amy Gergely of the Independent Insurance Agents of America (IIAA) says the best course of action is to ask lots of questions pertinent to your business. She recommends starting with some basics, like:

What products and equipment do you have at home, and how much would they cost to replace?
Do customers ever conduct business at your home, and if so, how many?
What course of action would you have to take if you were forced to leave your house temporarily due to natural disaster?

Different types of policies will be more or less inclusive on any of these points, and it's entirely up to personal need and preference which works best for any individual business. If you have employees, also necessary is worker's compensation insurance. These requirements vary from state to state.

Another important step is to make effort to protect your assets yourself. Avert crime and disaster by buying a home security kit and smoke detector, keep any important paperwork in a safe, and have a disaster recovery plan ready in advance. Liability prevention can be as simple as keeping backups of documents and having an attorney review contracts before you sign. Avoiding accidents comes down to devising and following safety rules, keeping your space free of hazards, and committing to preventative maintenance.

Choosing an insurance agent who understands your business can be a huge asset, especially one who has a wide variety of home-based business insurance options. They can help you to ask the right questions and find a policy perfect for you that will adequately protect your home and business.

Information provided by Drayden Insurance Ltd, an Edmonton commercial insurance broker.