It’s a common misconception that your home insurance policy will cover your home-based business. But it was never intended to. A homeowners policy or any other type of personal insurance is personal in nature. You risk not being covered, and your provider might even cancel your insurance policy for withholding information.

What kind of coverage do you need, then? That depends on the kind of business you have.

Who needs commercial insurance?

If you have a home-based business, you should have commercial insurance. It’s probably the last thing you want to spend your hard-earned money on, but not telling your insurance company about your home-based business can have dire consequences.

The provider may refuse to pay if you have a claim, and even if they do cover the claim, the amount of coverage provided for business equipment on your policy is minimal. Do you have any inventory, professional equipment or expensive computers? You’ll want to get specific coverage for those.

If you sell a product or give advice, you’ll need special liability coverage. And if you have employees or customers who visit your home office, you’ll need commercial general liability, too.

The good news is that commercial insurance adapts to the needs of every business. There’s even an affordable product designed for small businesses: the business owners policy (BOP).

What’s a BOP?

Bundled at a reduced premium, BOPs include coverage for a company’s most pressing needs:

• Liability insurance in case a client is injured or incurs property damage at your home
• Property insurance for your office and business contents
• Business interruption coverage in case a covered event causes your business to pause operations

The purpose of a BOP is to help you overcome catastrophic events and liability lawsuits, so you can keep your business running.

According to the Insurance Information Institute, a quarter of American small businesses never reopen after a major disaster. But if you have a BOP, you’ll receive money to cover your current bills, payroll during repairs, and lost equipment and inventory. That will help you protect the business you’ve been working so hard to grow.

What else do you need?

There are several other policies and endorsements to cover the specific needs of your business, such as:

• Professional liability (errors and omissions) if you give advice or produce work that others rely on
• Product liability insurance if you sell products
• Commercial auto insurance if you use your vehicle for business purposes
• Advertising injury if your trade exposes you to libel or slander, which may harm your brand’s reputation

Need help or have questions about your home-based business and insurance? Contact us. We’re here to help.