An estimated 12 million Americans operate a full- or part-time business from their homes, and that number keeps growing. Although savvy and creative in their own specialties, these entrepreneurs at times seem confused about how to insure their business against theft, fire and liability. Some believe that their homeowners policies cover all their home business insurance needs. As a result, a lot of these home business owners are uninsured. Below are some guidelines to help owners of home businesses to properly insure their business.

Be sure to shop. It'll take a few phone calls, but it could save you a good sum of money. Ask your friends, check the yellow pages and internet. Also check consumer guides, insurance agents and companies. This will give you an idea of price ranges and coverages available.

Business owners need both property insurance in case they're robbed or a fire breaks out in their company's "headquarters" and destroys equipment and inventory. They need liability insurance in case someone gets hurt using their product or services, or injures themselves at the business.

The first tip for business owners is don't assume that your homeowners policy covers your home business. It may, but probably only to a maximum of $2,500 for business equipment in the home and $250 away from the premises. It usually doesn't cover business-related liability at all. Your homeowners policy also doesn't insure your inability to collect your accounts receivable if your business records are damaged, and it won't replace lost income if you cannot operate your business due to damage to your home.

There are three ways you can buy the home business insurance coverage you need:

Depending on the type of business you operate, you may be able to add an endorsement to your existing homeowners policy. Some insurance companies offer a home daycare coverage endorsement for people who operate a daycare service for pay in their home. Some companies will offer property and liability insurance for "incidental" businesses operated from your home. However, each company may define “incidental” differently. For example, some companies consider an incidental business as one that grosses less than $5,000 per year.

You can buy several individual business insurance policies to provide the various coverages you need, such as business property, general liability and business income insurance. Or you can buy a business owners package policy designed for smaller businesses, which combines the necessary property and liability insurance coverages you need in a single policy.

Some insurance companies have begun to offer what amounts to a mini-business owners package policy specifically for home businesses. Some of these policies cover the loss or destruction of business property on or off premises; the loss of valuable papers and important business information; personal injury and advertising liability; accounts receivable up to $10,000; money lost on premises up to $5,000 and off premises up to $2,000.

The companies that offer these policies often require that you purchase your homeowners and auto policies from them. With those policies in place, your home business policy extends the amount of personal property and liability coverage you have on your home to your business. And if a fire or storm makes running your business impossible, it'll cover expenses and lost income for up to a year.

The important point is to talk with an insurance professional and get the most appropriate coverage for your home business that is available in your state.

Car Insurance: If you use an auto for your business activities, for example, transporting supplies or products, visiting customers, or ferrying employees or customers -- you need to make certain that your personal automobile insurance will protect you from accidents which may occur while on business. In many cases, your personal automobile policy -- which covers taking the kids to see their grandmother, picking up the groceries, or any one of thousands of personal tasks -- can also cover the business use of your auto. In some cases, however, depending on your type of business and the kind of vehicles you own, you may need to purchase a separate business auto insurance policy. A knowledgeable insurance agent or company representative will be able to determine which approach would be best for you.

Umbrella Policies: An umbrella policy offers you extra liability insurance that pays for a loss when the limits of your underlying policy are reached. So, if you're responsible for someone's injury that requires $150,000 of medical treatment and the liability limit in your underlying policy is $100,000, your umbrella policy will pay the additional $50,000. Keep in mind that most personal umbrella policies cover liability stemming from business activities only if these activities are included in the basic policy. Always check your policy to see how it defines business and business property, or ask your insurance representative.

Ask About Discounts: Insurance companies frequently offer discounts to owners of businesses with fire detectors or security systems. Some companies also offer discounts to persons who drive a minimum number of miles each year. Be sure to ask your agent or company representative if you're eligible for these or other discounts.

As Your Company Grows: Keep in touch with your insurance agent or company representative. Let the agent or company representative know if your business equipment, inventory or operation is more extensive than when you bought your policy. If you neglect to do so and you have a loss, you may find that your policy has limits far below the current value of your possessions.