Why You Should Take Another Look at Your Home Business Insurance

One thing about insurance: You shouldn't get it and forget it. Instead, you should revisit your policies covering your home, auto, business and more at least every year.

Why? One reason to look at your home business insurance is the best reason of all – you might not need to spend as much money for coverage. The other reason doesn't sound as enticing – you might need to spend more money for more coverage.

Let's take a look at both scenarios.

You might need to spend less

Consumer experts recommend shopping insurance coverage yearly before you simply renew. Providers base your premiums on the risks you face, and different insurance companies can evaluate risk very differently. That means you could save on your premiums – even while maintaining your current coverage levels – simply by switching carriers.

Next, review your coverages. Are you paying for protection that you don't need? For example, if you don't use your vehicle to operate your home business, you likely don't need commercial auto insurance for it. That could result in big savings.

Ask your agent about discounts. If you've installed a security or fire safety system, for example, you could be entitled to a price break. The same could be true if you've strengthened your computer firewall. Many business insurance providers offer discounts if you also purchase auto, homeowners, life or other coverage from them.

Finally, take a look at your deductible – the amount you agree to pay out of pocket toward a covered claim –and consider whether it's too low. Raising your deductible, all other factors being equal, can lower your premiums. It also will deter you from filing small claims, and limiting the number of claims you file can help your prices low as well. One warning: Don't raise your deductible beyond an amount you'd be comfortable paying if it becomes necessary.

You might need to spend more

Of course, a review of your home business insurance also could leave you paying more. That's because you could find gaps in your coverage. Perhaps you've expanded since you purchased coverage and now you make deliveries – you'll need commercial auto insurance. Otherwise, you won't have coverage if you have a wreck while you're on the way to distribute your product.

Or maybe you've made significant purchases of electronics for your business. You might need to update your contents coverage.

You also might need to add extra liability coverage if you allow customers or clients to visit your home. Otherwise, if one should slip on a carpet or trip on a child's toy, you could face a devastating lawsuit that could cripple your business – not to mention your personal finances.

You don't insure your home business?

There's one other scenario to examine – you might need to get insurance for your home business. Why? Because your home insurance will offer little – if any – protection for your venture. Your protection for any equipment or supplies you use would be very small – possibly less than $1,000. In addition, the liability coverage included in standard homeowners policies won't apply to anything related to your business.

One other reason to explore a commercial policy is to get business interruption coverage, which is important if you depend on income from it. Suppose your home is damaged by fire or another covered peril and you can't operate your home venture for an extended period during repairs. If you have business interruption coverage, you could be compensated for the time the business is closed. Otherwise you're on your own.

There are other scenarios as well where home business insurance could be helpful. But the most important takeaway is to take a careful look at your coverage annually to make sure you have everything you need and nothing that you don't. And if you don't have coverage, reconsider that decision as your home business grows and becomes more important to you.

HomeownersInsurance.com is an online resource for homeowners and drivers across the country. Offering comparative automobile and home insurance rates, consumers rely on HomeownersInsurance.com for the most competitive rates from the top-rated insurance carriers in the country. Square One, the HomeownersInsurance.com blog, provides fresh tips and advice on a range of financial topics to help homeowners and homebuyers make educated decisions about their insurance purchases.