Working from Home? Expand Insurance as Your Business Grows

As the gig economy grows, more and more people are opting to work from home, either to supplement their income from a full- or part-time job, as a freelancer, or to pursue operating a small business. Unfortunately, your homeowner's or renter's insurance may not cover damage to your business assets. Sixty percent of home-based businesses lack adequate business insurance, according to the Independent Insurance Agents & Brokers of America, based in Alexandria, Va. If you are running a small business or working freelance from home, and if the loss of machinery, tools, data or IT equipment would seriously impair your ability to make money, you want to make sure you have the right coverage. To safeguard your data, equipment and operations, you may want to follow these tips:

Check your insurance

If you are running a home-based business or need more protection for business property that is in your home, you may want to consider purchasing additional coverage. Depending on your needs, you may have a few different options for protecting your business property.

Rider to a homeowner's or renter's policy

The most inexpensive home-based business insurance is an add-on or rider that expands a homeowner's or renter's policy to cover the company. The cost of such a rider is minimal - often a few hundred dollars per year - but it generally provides about $2,500 of additional coverage. This type of insurance may be appropriate for a one-person business without a lot of valuable equipment or many business-related visitors, and unlikely to suffer a major loss if unable to operate for a while as a result of fire or other disaster.

In-home business policy

An in-home policy covers a broader spectrum of contingencies, including loss of critical documents or theft of funds being taken to the bank for deposit. Such a business policy, issued by a home insurer or a specialty firm, usually is a plan against injury or theft covering as many as three employees. You may be able to buy additional coverage to increase the protection your homeowner's insurance policy provides for business supplies. Some insurers may allow you to increase the limit up to $10,000. Adding this coverage may help cover inventory, such as cosmetics or kitchen supplies, temporarily stored in your home as you're preparing to sell it or deliver it to customers.

Business owner's policy

Business owners who need more than $10,000 of coverage should pay for a business owner's policy. This comprehensive policy is the most common type for small business and covers:

• Damage to or loss of business equipment and other assets
• Liability for customer injuries
• Loss of critical records
• Malpractice or professional liability claims, and
• Loss of income or a business interruption in the case of a power outage or a natural disaster.

Such a policy might also protect you when driving a personal vehicle for business purposes.