There’s an exciting career revolution taking place – say hello to the “gig economy,” a booming new job market characterized by workers who call their own shots, set their own schedules and control their own destinies. Nowadays more and more Americans are becoming a part of this employment shift. In fact, according to a CareerBuilder survey, 29 percent of workers have some sort of side hustle, especially millennials.
And many who work in the gig economy as freelancers, consultants or independent contractors run their businesses out of their homes. But while working from home brings freedom and flexibility, it also has risks. Here’s how to make sure you have the insurance protection you need for your home-based gig economy business.
Purpose and Protection
Protect your independence, and income, by planning ahead. Talk with your insurance agent to determine the type of coverage you need and answer any risk-related questions you may have. Many personal insurance policies do not cover incidents that happen when you are being paid to do a job from home. However, there are options.
The three most common include:
*Homeowners policy endorsement
An endorsement is often the best option for smaller operations with minimal business property and client visitations. For starters, it increases the level of protection for your business’s personal property. You can also purchase business liability insurance if a small number of clients come to your home.
*In-home business policy
This option often works best for a mid-sized business with pricier equipment and a steadier stream of clients visiting a home. Most policies reimburse you for the loss of important papers and records, accounts receivable and off-site business property. Some even include business income and extra expenses and cover a small number of full-time employees.
*Business owners policy (BOP)
If you have more than a handful of employees, a lot of costly tools or equipment, or a need for a high level of liability coverage, a BOP is probably your best bet. That’s because it offers the broadest amounts of coverage for business property and equipment, loss of income, extra expenses and liability. Tip: A BOP policy should be purchased in addition to a homeowners policy since a homeowners policy is still needed to cover the building, personal property and personal liability that’s not covered by the BOP policy.
You might also want to consider these additional coverages:
- Workers’ compensation if you have employees
- Disability insurance to protect your income if you’re ever injured and can’t work
- Business auto insurance if you use vehicles for business
If you need more coverage than your homeowners policy offers, you’ll need to consider the size of your business, the kind of work you do, how many clients visit your home and how often you work off-premises.
Here are some instances where you may need extra coverage as a “homepreneur”:
*Business personal property
Most homeowners policies provide limited coverage of $500 to $1,000 for tools, machines or other equipment you use exclusively for your business. If your belongings are worth more, you need extra coverage.
*Premises liability
Suppose you cut hair in your basement, and a customer trips and falls over a misplaced basketball. That customer might sue you. If he does, you’ll want premises liability since your homeowners policy won’t cover a liability claim filed by a business client.
*Off-premises liability
If you think that an accident that happens off your property isn’t your problem, think again. Home-based business owners are often liable for injuries to their clients or damage to their clients’ property that occur away from their home. For example, a real estate agent could be liable for injuries a potential buyer sustains during a home showing.
*Professional liability
Businesses that offer professional services or advice also should consider purchasing professional liability coverage. Professional liability provides coverage for negligence claims as well as defense costs of lawsuits, even if they’re groundless. This type of coverage protects you if someone accuses you, for instance, of doing inadequate or negligent work. A few examples could include a bookkeeper making a critical accounting mistake for a client, or a real estate agent accidentally misrepresenting key information.
*Business income and extra expenses
Business income coverage ensures you receive your regular income when a covered loss damages your premises. Extra expenses coverage kicks in if you need to temporarily rent space or equipment after a covered loss.
Because business insurance is usually much more complex than personal insurance, it’s best talk to your agent about the kind of home-based side gig you have and the best insurance for you based on your individual needs. Having the right coverage in place will give you peace of mind so you can focus on what you really want—to make your business a huge success.
