Home businesses are growing rapidly thanks to the Internet and World Wide Wed. Countless consultants, work at home moms, independent contractors now operate their businesses from home. If you're one of these professionals doing business from home, there are some critical insurance issues you need to be aware of.
Chances are, you have a homeowners policy to cover losses related to your home and the contents within your home. But when it comes to your home business, homeowners policies are limited as to what they'll cover. In fact, most homeowners policies cover a maximum of $2,500 in business related losses at home.
Maybe you're not worried about having to replace a damaged or stolen PC or printer. But you still need to consider other liabilities that could leave you in a financial bind. What sorts of liabilities would a home business operator be subject to?
Well for starters, if your customers come to your home for meetings or appointments, they could be injured entering your house by something as incidental as tripping on your steps. This could lead to a lawsuit, and you guessed it -- the suit would likely not be covered by your homeowners policy. Perhaps someone delivering a package falls or has some other type of accident in your driveway? How you do cover yourself for situations like these that are business related in nature, but occur at your home since that's where you're doing business on a full or part-time basis?
There are a few ways to get covered for business related liabilities at home. The first solution is to consider a "combo policy" that covers the home as well as the business. Some insurance companies now offer these policies which combine homeowners insurance with policies like commercial liability insurance and more. By combining homeowners coverage with business insurance you can save money. Ask your insurance agent or broker about this type of policy if your business is operated from home.
A second strategy is to simply get what is called a business "endorsement" added onto your homeowners policy. This is basically a rider that is attached to your homeowners policy that extends your coverage to your business. Depending on the insurance company you work with, your policy endorsement can cover things such as theft or damage to equipment, inventory and even GLI (general liability insurance) which covers you for business related injuries or property damage. If your home business qualifies for this type of policy it can help you save money on your commercial insurance by limiting occurrences of duplicate coverage.
When shopping for a home business combo policy or a business endorsement, be sure to ask about exclusions so you know what is NOT covered. Also, make sure your policy has high enough limits to cover all your potential home and home business liabilities. Too many people buy business insurance then find after an accident or lawsuit that they did not have a high enough limit. If your losses in a claim, settlement or judgment are $1 Million and your policy limits were set at $500,000, you'll be responsible for coming up with the rest. What good is insurance at that point? One way to get higher coverage amounts is to buy an umbrella policy. This type of policy can increase your limits and save save you money in the process.
These types of policies do not cost much for most home business owners. In most cases for just a few hundred dollars a year you can add business coverage to your homeowners premiums, including general liability. You can do it for less if you shop around enough both online and offline.
While running a business from home seems easier than setting up a shop or office at another location, you are still subject to liabilities. The right insurance policies can help protect your finances, your home and your business.
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