Home-based businesses have traditionally encountered difficulties finding affordable insurance that suited their needs; however, the growing numbers of small businesses and the self-employed have created a sizeable enough market that insurance companies are responding to with a variety of options. Depending on the size and nature of your home-based business, you might be able to add endorsements (or “riders”) to your current policies to cover your business assets and provide some basic liability insurance. This is most likely the case if you have little or no inventory and clients rarely visit you at your home office.

Stand-alone policies for home-based or small businesses are also available that offer a broader coverage than the endorsements provide. These include property and liability coverage, as well as business interruption insurance, limited coverage for loss of valuable papers and records, accounts receivable, and off-site use of equipment.

These choices can be economical because they roll several types of coverage under one umbrella. Depending on your situation, however, you may find that your needs are better met by buying coverage a la carte — picking and choosing specific policies to meet the particular insurance needs of your business.

The range of coverages and the prices charged for them varies widely from insurer to insurer. It's important to research the kind of coverage you need ahead of time, and then to shop around. If you don't know where to start looking, simply open the phone book or ask other home-based businesspeople who they would recommend.

Because many insurance professionals work on a commission basis, some can be quite sales-oriented, applying a fair amount of pressure to sign right away. Don't do this unless you're certain that it's the coverage you want — the policy will still be there tomorrow, after you've had a chance to think about it and to consult your accountant or other advisor.

Insurance Agents

Insurance agents represent one insurance company: They could be employees of that company, or self-employed. You may find that your current insurance agent is perfectly qualified to help you with the additional coverages that your business needs and that you may even qualify for discounts for holding several policies with the same insurer. If your agent isn't able to help, however, you'll need to investigate other insurance companies. You can call those insurance agencies direct, doing the footwork yourself, or you can talk to an insurance broker.

Insurance Brokers

Insurance brokers are independent of the insurance companies: Think of them as an intermediary between you and the insurers. Their advantage is the ability to offer you a variety of coverages from different insurers, therefore allowing you to pick and chose the plans that are right for you. This can save you time and money: You let the broker know what you're looking for and your budget, and they'll advise you on whether your expectations are reasonable and how best to obtain the coverage.

Associations

Insurance tends to be more expensive when you're just one person or one business. The premiums drop whenever insurers are covering a large number of people or businesses, because the risks (the claims) are spread out over a wider membership. For this reason, many trade, professional, auto, college alumni, and even social organizations offer insurance coverages for their members. If you're having trouble finding affordable policies, you could join one of these associations simply to access the insurance they offer.