Insurance For Small And Home Based Business Professionals

Unfortunately, when it comes to insurance benefits such as health insurance or life insurance, most home based business professionals come up short.

According to the National Bureau of Labor Statistics, 3 out of 10 homeowners operate a home based business. It is estimated that more than half of home based business owners are underinsured. According to the Independent Insurance Agents of America (IIAA) nearly 40% of those home based businesses surveyed are uninsured simply because they thought their homeowners policy covered their business.

The reality is that a typical homeowners policy usually only covers damages up to $2,500 on the premises of your home based business, and $250.00 off the premises. In addition your homeowners policy typically will not cover liability arising from your home based business. For example if a delivery person slips and falls when delivering a package you may not be covered.

When shopping for business insurance, you have three main choices:

Endorsements to your homeowners policy
In-home business policy
Small-business owners package policy (known as a BOP)

Endorsements

Depending on what type of home based business you operate, you can usually get an endorsement on your homeowners policy that has higher limits or covers specific perils or risk. For as little as $14 a year, you can double your standard policy limits for business equipment from $2500 to $5,000.

Some companies have started offering endorsements that include property and limited business liability coverage. Endorsements are typically only available for businesses that generate $5,000 or less in annual sales. They are available in most states.

In-Home Business Policy

The insurance industry has responded to the growing number of home-based businesses by creating "in-home business" insurance policies. For about $200 a year you can insure your business property for $10,000. General liability coverage is included in the policy. A business owner can purchase a $300,000 to $1 million in liability coverage for their home based business. If your business is shut down because of damage to your house, your in-home policy will cover lost income and ongoing expenses such as payroll for up to one year. The policy also provides limited coverage for loss of valuable documents, accounts receivable, off-site business property and use of equipment.

Business Owners Package Policy (BOP)

You may want to consider a package business owners insurance policy or what is known in the industry as a BOP. This package deal is designed to offer a simple, off-the-shelf product to small and medium sized home based business owners. A BOP is an excellent solution, in particular, for home based businesses that operate in more than one location or manufacture products outside the home office space.

The form is approved in 39 states including the District of Columbia and can cover businesses as large as 25,000 square feet and with gross sales of up to $3 million. The BOP offers some special features not offered in general business policies at a better value for smaller home based business owners.

For example if you run an alterations business out of your home and customer's clothes are damaged in a fire there the business owners policies covers that.

Like the in-home policy it covers business property and equipment, loss of income and extra expenses and liability. However, these coverages in the BOP are on a much broader scale.

Information provided by Independent Insurance Agents of America (IIAA), Insurance Information Institute (III), U.S. Bureau of Labor Statistics.