Property and Casualty Insurance for a Home-Based Business

More and more entrepreneurs are operating their new businesses from home. The advantages are obvious: running a home-based business is convenient and cheaper than renting or buying commercial office space. But running any business — including a home office — without adequate insurance coverage can be a recipe for disaster.

Neglecting to purchase separate property and casualty insurance for your home-based business can be a costly mistake. Your homeowner's policy might not offer enough protection. Most homeowners' policies cover only $1,000 to $2,500 for business equipment, and do not offer liability protection or loss-of-income coverage.

When deciding how much property and casualty insurance to purchase, examine your business and the amount of money you risk losing. Your home-based business should be covered for incidents such as:

• Client injury. If clients physically enter your home, you should be covered for injuries due to negligence. The coverage will pay for your client’s medical expenses and the cost of defending a lawsuit if you're sued. Read more about Liability Insurance for Your Small Business to understand all the scenarios that should be anticipated.
• Business interruption. If damage to your company's operations limits your ability to work, you'll be covered for lost wages and ongoing expenses, including suppliers' invoices. Interruption insurance is typically included in your business property insurance, but depending on your other arrangements, you may wind up buying it separately.
• Business equipment damage. If your equipment is damaged or destroyed by theft, fire, or a natural disaster, you'll be reimbursed for the cost of repairing or replacing it.