The one area of your home-based businesses that can't be overlooked is insurance. Insurance companies and experts on home-based businesses will tell you the wrong policy, inadequate coverage or an inappropriate policy for the type of business being run from the home, can have severe and far-reaching implications. If the business doesn't have a separate business policy, an insurance company could reject, or take away, the business owner's homeowner policy. And not having the proper liability or property coverage could be catastrophic should a customer slip and fall, or equipment is stolen or destroyed.

In other cases, everyone from banks and clients to state law may require the business owner to have insurance to cover the loss of inventory, worker's compensation or accounting or other recording keeping mistakes.

Luckily there are several insurance companies and various associations that provide coverage for home-based businesses. They now offer a wide variety of policies that cater to the specific needs and concerns of the home-based business owner.

The reason is simple: home-based business is booming.
It has become more acceptable to operate out of your home. The Home Business Institute, one of several trade associations, has estimated that as many as 25 million people now work from home, an increase of more than 25% over the last six years, and more than three times the number that did a decade ago, according to the U.S. Small Business Administration. The reasons, experts say, are clearly technology-related. Computers, fax machines, copiers, the Internet and telecommunications systems, have made it possible to work from virtually anywhere. Combine that with simple demographics, which note that typical homeowners today have fewer or no children than a generation ago and, subsequently more room at home to spare, and the recipe is right for baking a lot of home-based businesses.

But the recipe is also right for disaster! People often don't have the coverage they need when operating out of their home.  A business owner who wants to set-up in their home must first determine the level of exposure that business is expected to have. If, for instance, it is simply a one-person shop like an accountant, traveling salesman or writer, and they have very little contact with the public in their home, the need for liability coverage could be minimal. On the other hand, businesses that rely on customers coming to the home, such as a beauty shop or music school, would need to consider liability coverage.

Among the many features the home-based businesses owner must consider is coverage for loss of income, property damage, liability and employee theft,

Many home-based businesses owners don't realize that their business isn't covered by a homeowner's policy. Most homeowner's contract have a business exclusion written into the policy and some limitations. In some cases, a rider or endorsement can simply be attached to the homeowner's policy.

One item that homeowner's policy is unable to provide, and something that is important for professionals such as accounts and business consultants is professional-liability insurance. This type of insurance, also known as errors-and-omissions insurance, protects consultants should they be sued for mistakes that cause financial loss or damage to a client.

You may be able to secure an errors-and-omissions policy from your trade association, National Personnel Associates. Like NPA, specialized insurance plans for small-office and home-based businesses are offered through a variety of trade associations that cater to this growing field. A few of those include, the National Association for the Self-Employed
800-232-6273), Small Office Home Office Association (888-764-6211) and the Home Business Institute (888-342-5424).