Professionals that operate their own businesses need
professional liability insurance in addition to an in-home
business or businessowners policy. This protects them
against financial losses from lawsuits filed against them by
their clients.
Professionals are expected to have extensive technical
knowledge or training in their particular area of expertise.
They are also expected to perform the services for which
they were hired, according to the standards of conduct in
their profession. If they fail to use the degree of skill
expected of them, they can be held responsible in a court of
law for any harm they cause to another person or business.
When liability is limited to acts of negligence,
professional liability insurance may be called "errors and
omissions" liability.
Professional liability insurance is a specialty coverage.
Professional liability coverage is not provided under
homeowners endorsements, in-home business policies or
businessowners policies (BOPs).
What does a business insurance policy cover?
Insurance companies selling business insurance offer
policies that combine protection from all major property and
liability risks in one package. (They also sell coverages
separately.) One package purchased by small and mid-sized
businesses is the businessowners policy (BOP). Package
policies are created for businesses that generally face the
same kind and degree of risk. Larger companies might
purchase a commercial package policy or customize their
policies to meet the special risks they face.
BOPs include:
1. Property insurance for buildings and contents owned
by the company -- there are two different forms, standard
and special, which provides more comprehensive coverage.
2. Business interruption insurance, which covers the
loss of income resulting from a fire or other catastrophe
that disrupts the operation of the business. It can also
include the extra expense of operating out of a temporary
location.
3. Liability protection, which covers your company's
legal responsibility for the harm it may cause to others.
This harm is a result of things that you and your employees
do or fail to do in your business operations that may cause
bodily injury or property damage due to defective products,
faulty installations and errors in services provided.
BOPs do NOT cover professional liability, auto insurance,
worker’s compensation or health and disability insurance.
You'll need separate insurance policies to cover
professional services, vehicles and your employees
Business interruption insurance can be as vital to your
survival as a business as fire insurance. Most people would
never consider opening a business without buying insurance
to cover damage due to fire and windstorms. But too many
small businessowners fail to think about how they would
manage if a fire or other disaster damaged their business
premises so that they were temporarily unusable. Business
interruption coverage is not sold separately. It is added to
a property insurance policy or included in a package policy.
A business that has to close down completely while the
premises are being repaired may lose out to competitors. A
quick resumption of business after a disaster is essential.
1. Business interruption insurance compensates you for
lost income if your company has to vacate the premises due
to disaster-related damage that is covered under your
property insurance policy, such as a fire. Business
interruption insurance covers the profits you would have
earned, based on your financial records, had the disaster
not occurred. The policy also covers operating expenses,
like electricity, that continue even though business
activities have come to a temporary halt.
2. Make sure the policy limits are sufficient to cover
your company for more than a few days. After a major
disaster, it can take more time than many people anticipate
to get the business back on track. There is generally a
48-hour waiting period before business interruption coverage
kicks in.
3. The price of the policy is related to the risk of a
fire or other disaster damaging your premises. All other
things being equal, the price would probably be higher for a
restaurant than a real estate agency, for example, because
of the greater risk of fire. Also, a real estate agency can
more easily operate out of another location.
How do I insure my home business?
If you're running a business from your home, you may not
have enough insurance to protect your business equipment. A
typical homeowners policy provides only $2,500 coverage for
business equipment, which is usually not enough to cover all
of your business property. You may also need coverage for
liability and lost income. Insurance companies differ
considerably in the types of business operations they will
cover under the various options they offer. So it's wise to
shop around for coverage options as well as price.
Regardless of the type of policy you choose, if you're a
professional working out of your home, you probably need
professional liability insurance. Some types of in-home
businesses, such as those that make or sell food products or
sell home-made personal care products, may have to buy
special policies.
To insure your business, you have three basic choices,
depending on the nature of your business and the insurance
company you buy it from.
They are:
Homeowners Policy Endorsement.
You may be able to add a simple endorsement to your
existing homeowners policy to double your standard
coverage for business equipment such as computers. For
as little as $25 you can raise the policy limits from
$2,500 to $5,000. Some insurance companies will allow
you to increase your coverage up to $10,000 in
increments of $2,500.
You can also buy a homeowners liability endorsement. You
need liability coverage in case clients or delivery
people get hurt on your premises. They may trip and fall
down your front steps, for example, and sue you for
failure to keep the steps in a safe condition.
The homeowners liability endorsement is typically
available only to businesses that have few
business-related visitors, such as writers. But some
insurers will provide this kind of endorsement to piano
teachers, for example, depending on the number of
students. These endorsements are available in most
states.
In-Home Business Policy/Program.
An in-home business policy provides more comprehensive
coverage for business equipment and liability than a
homeowners policy endorsement. These policies, which may
also be called in-home business endorsements, vary
significantly depending on the insurer.
In addition to protection for your business property,
most policies reimburse you for the loss of important
papers and records, accounts receivable and off-site
business property. Some will pay for the income you lose
(business interruption) in the event your home is so
badly damaged by a fire or other disaster that it can't
be used for a while. They'll also pay for the extra
expense of operating out of a temporary location.
Some in-home business policies allow a certain number of
full-time employees, generally up to three. In-home
business policies generally include broader liability
insurance for higher amounts of coverage. They may offer
protection against lawsuits for injuries caused by the
products or services you offer, for example.
In-home business policies are available from homeowners
insurance companies and specialty insurers that sell
stand-alone in-home business policies. This means that
you don't have to purchase your homeowners insurance
from them.
Businessowners Policy (BOP).
Created specifically for small-to-mid-size businesses,
this policy is an excellent solution if your home-based
business operates in more than one location. A BOP, like
the in-home business policy, covers business property
and equipment, loss of income, extra expense and
liability. However, these coverages are on a much
broader scale than the in-home business policy.
A BOP doesn't include workers compensation, health or
disability insurance. If you have employees, you'll need
separate policies for these coverages.
What does a business insurance policy cover? 
Insurance companies selling business insurance offer
policies that combine protection from all major property and
liability risks in one package. (They also sell coverages
separately.) One package purchased by small and mid-sized
businesses is the businessowners policy (BOP). Package
policies are created for businesses that generally face the
same kind and degree of risk. Larger companies might
purchase a commercial package policy or customize their
policies to meet the special risks they face. 
If you're running a business from your home, you may not
have enough insurance to protect your business equipment. A
typical homeowners policy provides only $2,500 coverage for
business equipment, which is usually not enough to cover all
of your business property. You may also need coverage for
liability and lost income. Insurance companies differ
considerably in the types of business operations they will
cover under the various options they offer. So it's wise to
shop around for coverage options as well as price.