Serving Clovis, Portales and the Surrounding Communities

Insurance coverages vary for home-based businesses

Sandra Taylor-Sawyer

Insurance needs for a home-based business are not as different from a storefront business. However, there are areas that home-based business owners may overlook when considering insurance coverage.

Many homeowner insurance policies will not automatically cover a home-based business. In fact, by operating a business in the home it can render a home insurance policy void. When there is a separate structure from the home it is not typically covered under the homeowners' policy.

At a minimum, general liability, content, and business interruption insurance are coverage home-based business owners should consider. General liability will provide protection if an injury occurs at the home.

Content insurance will cover the business equipment excluding data files. If the equipment is used outside of the home, such as a laptop computer, a separate policy will be needed to ensure coverage. The interruption insurance will replace lost revenue in the event of a natural disaster.

Other uncommon insurance coverage for a home-based business includes auto, errors and omission, professional and product liability, and malpractice. Yes, malpractice.

Typically thought of as insurance for the medical field, the coverage protection is for businesses that provide treatment. For example, a dog groomer business should consider obtaining malpractice insurance.

Coverage can be obtained that protects the service business and the client from losses suffered by the service provided, as well as a shield for personal assets. Product-base businesses should consider insurance to protect against none or incorrect performance of the product.

Finally, all home owners should review on an annual basis their insurance policy due to the definition for a business. An individual may have a hobby that is considered a business by the insurance industry.

The best direction is to analyze needs and plans of the business, meet with an insurance agent to discuss coverage options, and shop around for the best deal that meet the businesses needs. This will take several worthwhile hours of the business owners' time.

Regardless of what type of contract is being considered, one should always seek legal counsel to understand the small print and before signing on the dotted line.