(MONEY Magazine) – That's Fred, the Federal Express man, staggering up the walk with several large overnight envelopes for my home office. That's my son's skateboard. Oh, no! Look out, Fred! This might be a good time -- while Fred is up in the air -- to review my homeowners insurance policy and see whether I am covered. Here we are. Section 2. Paragraph 1. ''Personal liability and medical payments to others do not apply to bodily injury or property damage arising out of business pursuits of an insured.'' Bad news. How could I have let this happen? I spent all that time picking out the right computer for my home office and getting a letterhead that would properly reflect the seriousness, yet infinite flexibility, of my budding freelance business. And here I am, about to be wiped out because it didn't occur to me that I might need special insurance. ''It doesn't occur to a lot of people,'' explained Harvey Seymour of the industry-sponsored Insurance Information Institute. ''Know what? You might not even be fully covered for damage to your computer or other business equipment.'' ''Why not?'' ''Well, they're not exactly personal property, are they?'' He had a point. I called my insurance agent to find out how much coverage I had for business liability. ''Just about zero,'' he replied. ''You're not covered at all under your homeowners policy if someone gets hurt at your house while engaged in an activity related to your home business.'' ''What about property?'' ''Good news. Let's say your house burns down.'' ''Okay,'' I said weakly. ''Your home office is covered as part of your house. You're even covered for loss of business equipment up to $200. And I can sell you a rider that expands your homeowners policy.'' He described the Incidental Business Option, which would extend my $100,000 homeowners liability to cover business-related injuries. It would reimburse me up to $5,000 for damage to furniture, machinery and what not. It would not cover me for the loss of my own documents and data or loss of business income. But its protection would extend beyond my home so that if a client got hurt while riding in my car I would be all right. ''Sounds expensive.'' I said. ''What does it cost?'' ''How's Fred?'' he shrewdly inquired. ''Fred landed in the grass. He's fine.'' ''In that case, about $14 a year. Or $16 if you want to boost the liability to $300,000 and add $5,000 coverage on business equipment. But here's some more good news.'' I cringed. ''Your computer is already covered up to $3,000 under your homeowners policy whether you use it to do your office bookkeeping or just to play games. But only our company does this.'' ''Why are you guys so generous?'' I had to ask. ''Enlightened self-interest,'' he said.''We got tired of hassling with people over whether a home computer was for business or family so we cover them both. Can I sign you up for the Incidental Business Option?'' I promised to call back -- after I made a few more calls to insurance companies. I found that there must be a hundred different ways to insure a home office, and your insurance agent is probably the best guide to finding the right one. He will want to know first what kind of work you're doing. If you are just packing work home from the office, your homeowners policy is all you need. Even if you operate a small business from your home, such as doing accounting a few hours a day, many companies give you rudimentary coverage as part of their standard homeowners policy. If you do decide you need extra coverage, the next question is how much? For liability coverage, get as much as you can afford but at least $300,000 -- a reasonable minimum, given today's hefty judgments. As for equipment, let a worst-case scenario be your guide. If it would cost you $5,000 to refit your office completely, then have your agent give you a price for coverage of this amount. The price of a basic home office rider varies from company to company but is generally in the $15-to-$25 range. Most of these riders are pretty much the same: the liability limit and deductible are identical to those on your homeowners policy and you get up to about $10,000 of coverage for office equipment. But the policies offer no protection for architects, real estate agents, engineers and others whose jobs often take them away from the office. If you are one of these embargoed professionals -- or if your business requires you to own equipment worth more than $10,000 -- you should consider a separate small-business policy (see the box below).

In the end I took the easy way out. I simply coughed up $16 to add the Incidental Business Option. And stashed the skateboard in the garage.

BOX: Check It Out HOW TO BUY A HOME BUSINESS POLICY

A basic small-business policy provides more extensive insurance coverage than homeowners policy riders. Like the riders, it compensates you for property damage from fire, theft, vandalism, lightning and the like. But it also covers the loss of any business data and lost income from such accidents, which riders do not. On the liability-coverage side, you are protected from lawsuits for personal injury and also for injuries arising from defective goods you may manufacture or from breach of contract. A business policy with $300,000 limits on both property damage and liability costs $250 to $350 a year for people in low-risk jobs such as accounting and freelance writing. If yours is a high-risk occupation, like contracting or dentistry, the cost of the policy jumps to $1,500 to $2,000. Among the companies that provide it: Aetna (203-273-0123), Prudential (215-784-2345), the Fireman's Fund (800-527-5787) and Nationwide (800-421-3535).