Business Owners Policies for the Self-Employed

Who needs a business owners policy?

Simple, anyone that runs a business from their home should have one. A comprehensive coverage homeowners policy will cover economic losses caused by damage or legal liability but, once a home business is discovered any economic loss that can be associated to your business is your problem. Some homeowners policies allow business owners to purchase a policy rider that will cover losses associated with their business. If your homeowners policy provider doesnt offer this option you should consider a separate business owners policy.

Suppose your home office gets hit by a bolt of lightening (it happens). The loss from damage to your house, computer and loss of income amounts to 50,000. If your homeowners insurance discovers that you were running a business from that room, and if they sent an adjuster they certainly would, they have the right to refuse any coverage.

On the other hand if you were wise and purchased a business owners policy your entire loss would be covered, even the loss of income.

Increasingly important is bodily injury liability. If you have business visitors in your home, a business owners policy should cover any liability if theyre injured in any part of your home. Conversely, if you simply had a homeowners policy and someone was injured in your home, office or anywhere, they may refuse coverage for any liability. You dont need to be reminded about how expensive personal injury liability can be, do you?

What about product liability?

Additional product liability coverage can often be added to a business owners policy for an extra fee. This covers you in case someone is injured using your product. As you are probably aware, regardless of your involvement in the manufacturing or design process. The price of this coverage can be extremely expensive, depending on the products you distribute, but is definitely worth it. I know you dont need to be reminded about how expensive product liability can be.

What if Im not eligible for a business owners policy?

Different insurance companies have different criteria for excluding businesses from their policies. If one insurance company turns you down, ask another. Often, companies that allow riskier businesses to purchase policies also charge higher premiums, so it definitely pays to shop around for a policy that fits your particular business.