Recently an article in the local newspaper featured a story about a senior citizen that teaches piano lessons out of her home. She has been doing so for over 50 years, and hundreds of students have sat at her piano, learning pieces from “Chopsticks” to Ravel’s “Gaspard de la Nuit.”

After reading the piece, I decided that “Home-Based Businesses” are a good topic for my blog.  In the current economy, many single parents, senior citizens and stay at home moms are choosing to become entrepreneurs. Home-based – child care, tutors, piano teachers, pet sitters, bakers, dance instructors and hair studios are popping up all around my town. I think it is fantastic, as many great enterprises from Apple Computer to Harley-Davidson began in garages and basements.

The downside, is that there is often a misconception that everything that happens under your roof is covered by Homeowners Insurance. Liability, equipment and theft are generally all covered under your Homeowners, but many carriers have “business use exclusions” in their renters or Homeowners Insurance policies. If something catastrophic happens with your home-based business, or there is a substantial injury on your premises, you could lose everything by assuming that the claim will be covered by your Homeowners. Also, some Homeowners policies exclude property owners from having a home-based business. That is why it is so important to read every word of your policy.

 If you decide to begin a small business out of your home, you should discuss “purchasing an endorsement” with your insurance agent. “Limited Business Coverage” endorsements can be added to some existing Homeowners policies for nominal fees, but they give you limited protection and coverage in case of claims.

 My recommendation would be to sit with an insurance professional (especially one that specializes in commercial, small business and home-based business policies) and review your business plan and what your insurance needs are. Different carriers offer various packages and policies. You may need to seek a BOP (Business-Owners-Policy) or Liability Policy to protect you and your business assets.

Like a good accountant, financial planner or lawyer, you should be able to depend on your insurance professional for advice in running and growing your home-based business.