If you think your homeowners insurance policy also protects your home office equipment, think again. Only a business owners policy provides the home business insurance you need when your computer, fax, or printer get whacked by a natural or man-made disaster. Here’s what you need to know about home business insurance that protects your home-based business from your worst nightmares.
Learn the home business insurance language
You say “potato,” your insurance company says, “We’re raising your premiums.” You need to speak the same language when buying home business insurance. Here are the terms you need to know.
- Home office—A designated place in your house where you conduct most of your business. The family room computer is not a home office. A remodeled bedroom, with files, faxes, and a partners desk, is a home office.
- Homeowners policy—Insurance covering the loss of things in your house and protection against liability associated with your home. Typical policies cover $1,500 to $2,000 in computer losses and $500,000 to $1 million in liability.
- Umbrella policy—Extra liability—not loss—coverage against terribly negligent claims typically more than $1.5 million. A dinner guest who falls into a giant hole you dug in a walkway would have a terribly negligent claim.
- Business owners policy—This is a home business insurance package that typically covers $10,000 to $20,000 in loss and $1 million in liability associated with a business. It costs about $500 and is available to small and mid-sized companies.
Why you should care about home business insurance
Insurance companies won’t send checks for business losses covered under a homeowners policy. And if they discover that your family room computer was filled with business files and data, you’ll have some explaining to do before/if the company cuts you a check.
What you should do about carrying home business insurance
Don’t wait for a rainy day to discover that your homeowners or umbrella insurance policies don’t fit your home business insurance needs. Read your policy. Talk to your insurance agent. Pay at least $500 a year to buy a business owners policy so you and your pricey computer can sleep well at night.