Working from home can be liberating and lucrative, but may inadvertently put your entire business (and life) in a bind if you’re not properly prepared. If you’re one of the 38 million people working from home in any capacity, it’s imperative to know that your home insurance may not provide adequate protection for your business, no matter how small.
Too many at-home earners aren’t aware that there are gaps in their coverage until they’re presented with a dire situation. Your inventory and business property can literally go up in smoke, be ruined by a water leak, or be outright stolen. And if you are relying on homeowner insurance to pick up the pieces, you may be surprised to find that you have very little financial recourse.
So what should you look for when having your homeowner policy endorsed for your business? It’s not always obvious – which may be why so many at-home entrepreneurs don’t have the insurance they really need. If you operate or conduct any sort of business out of your home, be sure your insurance partner offers some, if not all, of the following coverage options to best protect your interests.
1) Replacement Cost Coverage for your Home Business Property. Broadly, this covers business personal property and home business property or inventory – such as a burst pipe damaging a wedding photographer’s camera equipment. Replacement Cost Coverage for your Home Business Property also includes personal property owned by others in your care, custody, or control for business purposes.
2) Coverage for Other Structures on your property used for Home Business. For businesses that store their business property in a free-standing garage or other structure on their property. Direct sellers for multi-level marketing brands often have a supply of expensive cutlery, candles, skin care products, detox teas, etc. in their garage.
3) Loss of Income and Extra Expense Replacement. As an option to guard against dreaded downtime, this protection covers loss of business income that would have been earned (and related incurred expenses) during an interruption of home business, or when the premises is unfit for occupancy due to a covered loss.
4) Business Liability. Protect your business from a variety of claims, including bodily injury or property damage to others that can arise from your business operations. A hair stylist may have customers coming and going from their home – and a customer may slip on the front porch, resulting in severe injuries. This type of coverage can shelter your assets, keeping them beyond the reach of a legal action.
5) Money and Securities Coverage. This coverage protects insured monies against loss by theft, disappearance, or destruction both on and off-premise. This is crucial for any cash-based business.
6) Valuable Papers and Records Coverage. Especially useful for graphic designers and other creative professionals, this covers the cost to reproduce most printed and electronic documents in the event of an accident. If an architect’s blueprints suffer some misfortune inside the home, a claim can be made for the time already spent on the project.
7) Property of Others Coverage. Do you handle your clients’ personal belongings regularly? Consider opting for a policy that covers situations where personal property is temporarily in the care or custody of another person or entity. A work-from-home tailor who experiences a grease fire in the kitchen may also experience smoke damage to a client’s clothing.
8) Computer and Software Coverage. If you’re a den-dwelling digital nomad, be sure your insurance covers digital hardware and software in the event of damage to your valuables during the course of business. Something as simple as spilling a glass of water on your laptop can turn into a business disaster without the right coverage.
9) Professional Liability Coverage for Certain Professionals. For many professions, there’s coverage for when a business owner renders a professional service and an accidental mishap occurs. For instance, if an at-home barber accidentally cuts a client’s scalp and the client intends to seek payment for damages.
10) Excess Liability Coverage Included in Your Homeowner Policy. Lastly, consider an option that has everything you need for homeowner, business and excess liability coverage, all under one policy. In the event a catastrophic claim comes your way, excess liability coverage puts a limit on top of your underlying policy.
Home-based business insurance picks up where homeowner insurance leaves off. So whether you’re an evening accountant, social media influencer on the side, full-time day trader, or home-party sales maven, make sure you’re covered. After all, you work from home for the convenience – not to lose sleep over uncertainty!
