Q: Do I need extra insurance to cover my home-based businesses, aside from my regular household insurance?

A: The short answer is YES! However, what you need depends upon the kind of business, the location, and the kind of coverage you want.

Your homeowner’s or tenant’s insurance policy will probably include public liability as well as fire and theft coverage. But this insurance probably would be invalid if you made a claim because of your home business. Each policy is different, so read the fine print.

Be sure to inform your insurance agent that you are starting a home-based business, in order to protect your personal coverage. In some cases, a new commercial policy may be required, depending on the type of business and the risk involved. In other cases, the basic policy can often be supplemented to provide the extra coverage at a minimal cost.

If you are producing a product, you might want to consider product liability protection in case someone were to sue you for damages resulting from use of your product. You may also find that exhibiting in a large trade or consumer show will necessitate public liability insurance as a prerequisite to renting exhibit space.

As a self-employed person, you might also want to consider disability insurance, which provides income if your work is interrupted due to a major illness or injury.

Also available are various types of life insurance which, for instance, can provide funds so that, when you die, the disposition of your small business is handled according to your wishes. Insurance can provide cash to liquidate or continue the business until it's sold, or to buy out a partner's share on the death of that person.

Insurance is a complex topic, especially when it comes to small and home-based business. So consult your agent to define your own particular needs. Don’t take any chances.