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Becoming a freelancer and working in a home-based business are two of the biggest trends to hit the American business world in the last few years. More people every year opt for the freedom of becoming their own boss, setting their own hours and working out of a home office personally customized by them for their own maximum comfort and productivity. Unfortunately, many of these same people are operating their offices under a potentially costly misconception: They believe their current homeowners insurance is covering their work space and any and all events that might take place there. Should a delivery person become injured on their property, for instance, it is unlikely that they would be covered under their current policy. That is why it is so important to learn about home-based business insurance and how it can benefit you as a work-at-home entrepreneur.

Think about all of the assets you currently have in your home office. They include but are not limited to your desktop computer, laptop, printers, fax machine, modem and router, telephone system, desk and chair, filing cabinets and software. The average homeowners policy only covers a maximum of $2,500 in property used for work purposes on your home premises and a mere $500 for goods off-premises. That wouldn’t even come close to reimbursing you for all of these items in the event of a catastrophe. Many policies also offer little or no coverage if your home office is situated in a shed or garage separated from the main part of your home.

That isn’t all of the bad news either. There are several events that homeowners insurance may not cover, including injury to a person that occurs on your property for work-related reasons. By the same token, your standard homeowners policy might not reimburse you for the days or weeks your home office is closed after being damaged by fire or natural disaster. Furthermore, it may go without saying, but your business is subject to the same exclusions that already exist in your homeowners policy. If your house isn’t protected by flood insurance, for example, your business will not be either. Finally, things can get even more complicated if you are using your home office to telecommute. In this case, you might be covered by your own homeowners insurance or that of your workplace if you are using their computer equipment or smartphones. The two providers may even get into a fight over who is responsible for covering you in the event of a claim.

The best way to find out the extent of your coverage under your homeowners policy is to consult your documentation. Contact your agent and ask questions if anything is unclear. In some cases, your agent can add a rider to your current coverage to ensure that your policy addresses the contingencies you are concerned about. However, you may find that there are too many holes and insufficiencies in your homeowners policy. In that case, purchasing home-based business insurance is your best bet. Designed specifically for the needs of entrepreneurs and their work properties, these policies are smart investments for the serious, long-term business owner. As freelancing becomes even more the rule instead of the exception, an increasing amount of Americans will need to meet the insurance challenges it brings about. Home-based business insurance policies look to be the coverage of choice in these situations.