Guide to Properly Insuring a Home-based Business

1. Homeowners Policy Endorsement. This means paying a little more to bulk up on how much you can recover for property losses, but typically does not cover all the liability issues you may face.
2. Home-Based Business Policy. This stand-alone policy can be purchased as an addition to your homeowners coverage or separately from a different insurer. It can include the loss of business-related data and papers, business interruption, a small number of employees and liability for business clients and products.
3. Business Owners Policy (BOP). These are the broad-based policies that most small businesses use. The coverage here is essentially the same as the home-based business policy, only with greater protection and more options for additions like malpractice.
4. Self-Insurance. This is used mostly by large corporations that can withstand large losses. Instead of paying an insurance premium each year, the business invests the money, and hopes that the interest accrued covers any future loss.

Tips & Tactics
Helpful advice for making the most of this Guide

• Know what your typical homeowner's policy does NOT include when it comes to your home-based business: Office equipment is typically covered for no more than $2,500, which will likely not cover even your computer and printer if they are stolen or destroyed. Liability for people injured in your home is only covered for social visits, not business clients.
• If you have employees, you may also have to look into purchasing separate workers compensation and health insurance.
• Don't buy all the extras — you may not need them. Assess the minimum you require (business data, computers) to do business and assess how you can protect or acquire that after an incident so that you don't need specialty insurance.

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