Does My Home Insurance Cover My Home Business?

There are an ever-growing number of North Carolinians who have chosen to run businesses from their homes, whether this involves selling products around the community, working online or bringing work that's more conventionally done in an office setting into the home environment. While home-based businesses have proven to be a good source of extra income for those living here in the Greensboro area, all of those profits and more could conceivably be lost in the blink of an eye if some type of unfortunate incident were to occur and that home business was not previously covered by proper insurance protection.

Home Insurance Policy Coverage

In Greensboro home insurance agencies are fairly plentiful but only a select few have made it their mission to highly educate their policyholders as to exactly what their insurance does and does not cover. Homeowners insurance is typically built around three benefit areas:

• Protection against covered losses suffered to your home and other structures on your property
• Protection against covered losses suffered to your personal property and other contents located within your covered home structure(s)
• Protection against losses from liability charges, including both legal costs and judgments

What is unclear, however, without reading the terms of your specific homeowners (HO) policy, is what loss protection is afforded to your home-based business. This is because every homeowners policy can be unique in its particular coverage. Typically, however, it can be safely said that standard homeowners insurance will likely leave gaps in protection as it applies to your business, leaving you exposed in the event of losses in both business property and liability risks.

Additionally, even if you do have some coverage in these areas from your standard homeowners policy, this coverage is typically quite limited in the amount of coverage offered. Most standard HO policies limit losses on business property (on premises) to no more than $2500 and losses for business property off premises to $500. You can see that if a fire occurred in your home office and you lost your computer, copy machine, fax machine, office furniture, smart phone and more that your losses could easily exceed $2500.

Three Easy Fixes

There are three potential solutions to your home-based business insurance needs and you should consult your insurance agent to see which best suits your particular business:

1. An endorsement to your current homeowners policy
2. A separate in-home business policy
3. A dedicated business owners policy (BOP)