Making a fire insurance claim after damage to or the total loss of your home is complicated enough, but what happens when you also run a business out of your home? If you’re operating any kind of business at home, a typical homeowners insurance policy may not be enough to cover everything you might lose.
Not only would you risk under-insurance on this portion of your loss; but if your insurance company is not aware that you’re running a business from the home, that fact could even void your coverage entirely.
With the right insurance, you can be covered for commercial fire damage and successfully make a fire insurance claim even if the loss occurred in your home.
Nearly 60% of small businesses are home-based, while even more (nearly 70%) are started at home. Fortunately, there are insurance policies that can keep you adequately covered even if and when the business is run from your home.
Below we have listed some of the things you should know about insuring your home business. These coverages might be available as an add-on to your residential policy, or under a separate policy of insurance.
#1 Insuring Business Equipment
A home insurance policy is designed to help you replace personal belongings lost in a fire. You can receive a substantial amount of money to replace your residential personal belongings, but standard home insurance policies typically put a limit on recovery for business equipment and/or contents of about $2,500.
The definition of business equipment could be extensive, including:
- Computers, laptops, printers, and other electronics;
- Power tools and hand tools;
- Hairdressing supplies and equipment;
- Any other equipment you use in your home-based business.
Business property insurance will make sure that your home office equipment, tools of the trade, and other business-related contents are covered if there were ever to be a fire or other type of loss.
#2 Business Interruption Insurance
If you depend on your home business as your primary source of income, business interruption insurance could be the difference between devastating financial hardship and getting through this tough time with some of your financial health intact.
Business interruption insurance covers income lost due to an insured peril, such as a fire. A policy generally provides reimbursement for profits based on your previous month’s performance, as well as fixed costs, increased temporary location costs, taxes, loan payments, and employee wages. Just because you’ve had a fire doesn’t mean you don’t have to keep up with obligations. Business interruption insurance helps you bridge the gap and ensure you can reopen once you’ve recovered.
Looking beyond fire insurance claims for a moment, liability insurance is especially important if you are inviting clients into your home, and it’s where your insurance company may reject your claim if they were not aware you were running a business from your home. If a client were to get hurt while on your property, you need to have insurance to cover any legal costs.
Product liability is also worth considering if you make or sell products out of your home. Its protection for you and your business in case the product causes harm.
When you run a home business, you need to be adequately insured. If you are making a commercial fire damage claim and you’re worried about being under-insured – or you have a significant claim, talk to a lawyer or an independent insurance adjuster about how they can guide you through the process.