Working from home is becoming rather popular. People desire working either straight from bed or in their own personal office. However, having a home based business could face some risks. Unfortunately homeowner’s insurance does not cover home-based businesses. If you didn’t know this, you’re not alone: “According to the Independent Insurance Agents and Brokers of America (IIABA) 60 percent of home-based businesses lack sufficient business insurance coverage.”
The insurance risks to be aware of with your home-based business.
It is important to invest in commercial insurance coverage like other businesses, as a homeowner or auto insurance policy won’t cover common home-based business risks.
The following will be a list of risks to be aware of:
Deliver Personal: If an injury occurs during the time of business, it is not going to be covered under homeowner’s insurance. You could be found liable if a delivery person got injured while making a business-related delivery to your house. Or, say a customer trips on your sidewalk walking up to your home-based computer repair shop and breaks a hip, your homeowner’s policy will not cover these injury expenses.
Business Property: If you have a customer come over to your house and their laptop breaks when falling on your property and it’s destroyed, you’re responsible for their injuries and any damage done to their property. If a tree crushes a customer’s car that is parked on your driveway, you are responsible for those damages also. Your homeowner’s insurance won’t just deny any coverage for damage to another’s property that is related to your business operations. It also won’t protect your business property, such as computers, devices, and printers from theft or vandalism.
Liability: Many real estate agents that are working primarily from home are actually running a home-based business. If you drive on company business you will more certainly need commercial auto insurance. Even if you’re making minimal deliveries, regular auto insurance won’t cover business-related losses. It works like homeowners insurance if it happens during the course of business or is business-related, it’s not going to be covered.
Accident: Similarly, if a customer or client is injured in an accident in your car, they are not going to be covered, without having the proper coverage. If you fail to have that coverage, you will have to pay judgments or claims. Auto accident lawsuits are expensive enough, but when people get injured or their property damage in or by your business vehicle, the ensuing lawsuit could be substantial.
Now, if someone hits you and doesn’t have insurance or has some insurance, but not sufficient coverage to pay for the damages, you could face other issues. If you’re driving for business and have the standard auto insurance, and are hit, you better hope that the other person is insured, or else you won’t be able to claim your personal car insurance uninsured motorist’s coverage.
You do not want to lie about having a home-based business, because if you cause an accident, injuring other drivers and you damage their cars, your personal auto insurance is not going to provide coverage. Some insurers may even cancel your policy because you failed to inform them of the vehicle use type.
Three Types Of Insurance Designed For Home-Based Businesses.
Most homeowner’s policies limit coverage for personal property used in business. Why take chances? If they’re stolen or damaged, the cost of replacing your computers, printers, scanners and fax machines can add up. Coverage for business property on the premises is limited to a few thousand dollars, and off-premises it’s more like $250.
Below are the three types of insurance designed specifically for home-based businesses:
Homeowners insurance policy riders
Adding a rider to your homeowner’s insurance is the most economic change in policy. It has an average cost of under $15 a year to obtain about $2,500 in additional coverage. This isn’t a lot, but it will often make a big difference to smaller companies; this option is usually only available to businesses with $5,000 or less in gross annual business and not much equipment.
In-home business policy
This policy is more appropriate for someone with several employees and a lot of business traffic in and out of their home. It provides more coverage for a variety of incidents, on average $10,000 or more, and costs about $200 a year on average. This policy also includes general liability coverage from $300,000 to $1 million, and limited coverage for loss of valuable documents or information, off-site business property coverage, and use of commercial equipment.
Business owners policy
This is what most small to medium-sized businesses need, and it is a great choice for home-based businesses that have items manufactured or produced elsewhere but run the business from home. This policy is also perfect for those who make products at home to sell elsewhere or online. It includes all the coverage options seen in an in-home business policy, but on a larger scale.
Paying for additional insurance policies may seem like more bills added to the pile, especially when you’re starting out and want to minimize your expenses. However, it’s one of the most important things business owners can do. Contact Brazelton Insurance Group today to explore your in-home business options.