Many owners of home-based businesses assume they are covered by their homeowners, condominium or tenants policy. The truth is not only are they not covered - but these business activities could actually void their home insurance (unless a home-based business endorsement is added to the policy).

We recommend that owners of home-based businesses obtain a small business insurance package including:

Property coverage - This will cover any tangible piece of property, such as your building, office contents, equipment, and inventory.

General Liability Insurance - This protects against any claims from a third party who may injure themselves while on your property, or incur an injury or property damage as a result of a service offered or product sold by your business.

Depending on your answers to the following questions, you may also want to consider these other types of coverage:

(1) Do you provide professional advice? 

Professional Liability Insurance (otherwise known as Errors & Omissions) protects professionals - including management consultants to architects/engineers and financial professionals - against allegations of error or negligence by a third party.

(2) Do you sell a product?

Product Liability Insurance will protect your business from liability resulting from non-performance of your product.

(3) Are you financially prepared to weather a major catastrophe?

Business Interruption Insurance compensates for lost income if a company needs to close due to an unforeseen problem. Depending on the needs of the business, it could cover the profits that would have been earned, and operating expenses, such as electricity. It can also help keep valued employees with unique skills on the payroll.

Whether you are considering starting up a home-based business, or you are already open for business, these are important issues that I encourage you to discuss with your broker if you haven't done so already.