Too Little Insurance on Home Business Can Be Costly

Article excerpt

Q. I operate an alterations business from my home and recently read about another owner who lost a business after a flood because he didn't have proper insurance. What kind of business insurance do I need?

A. You and many others are probably not properly insured for your home office. It is estimated that more than half of home-based business owners have no special coverage. Most assume they are covered by their homeowner's or renter's policy. But personal insurance policies provide little or no coverage for business-related losses.

Many homeowner policies exclude liability coverage for business pursuits as well as computer and other business equipment. If electronic equipment or incidental business-property items are covered, it is often limited to $2,000 to $3,000.

To obtain protection for your home-based office, purchase a rider or add a business endorsement to your homeowner's policy. These policies provide a limited amount of property coverage for losses to home office equipment and furnishings, including a limited amount of liability coverage for personal injuries to clients or employees while on your premises.

Many insurance companies offer home-business endorsement plans that cost less than $200 a year. …