You finally did it. You started your own business. You get to work from home. No more battling the traffic on SH 83 and SH 115 or dealing with the constant backups on I25. While you’re saving money on your commute, make sure you are fully insured and saving money on your insurance policies.
Contrary to popular belief, homeowners' insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners' policy to cover normal business risks such as property damage. However, homeowners' policies only go so far in covering Colorado home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.
Along with shedding leases, commuting and other costs of “conventional” business operations, many home-based entrepreneurs assume their homeowner’s insurance policy provides the protection they need.
This is not always true.
According to the Independent Insurance Agents and Brokers of America, Inc., homeowner’s policies were never intended to cover business exposures. Typically, these policies limit coverage for items used in a business (e.g., computers, fax machines, filing cabinets, tools and inventory, etc.) to $2,500 in your home and $250 away from home.
What’s more, a homeowners policy provides no liability insurance for your home-based business, nor does it provide business interruption protection in the event that fire, major storm, or other situation causes a your business to cease operations temporarily or permanently.
Fortunately, home-based businesses have several options for bridging insurance gaps. They include:
- Incidental Business Endorsement. Depending on your business, you may be able to attach this endorsement to your existing homeowner’s policy to cover on-premises structures or equipment that you use for business. This endorsement can also be tailored to include business liability.
- Business Owners Package Policy. If your in-home business does not qualify for an incidental business endorsement, you can purchase coverage under a business owner’s package policy (BOP), which provides property and liability coverage.
- In-Home Business Owners Policy. Southern Colorado Insurance Center offers policies that combine homeowners and business owner’s coverage into a single policy that provides both business coverage (business liability, replacement of lost income) and homeowner’s coverage for fire, theft, and personal liability.
- Vehicle Policy. If you have a personal vehicle that’s sometimes used for business or if your in-home business is the owner of one or more vehicles, you may need to purchase a Personal or Commercial Automobile Policy.
If you are a small business owner or run a home-based business in Colorado, make sure you are protected. After all, you work hard for your business. At Southern Colorado Insurance Center, we work hard to protect it!