According to surveys, nearly one in four Americans are operating some form of home-based business. These businesses range from relatively small, often part-time pursuits such as tax preparation, or small appliance repair, to larger, full-time enterprises such as construction companies and real estate offices. You may be one of the thousands seeking success in multi-level marketing, or possibly consulting. Maybe you’ve turned your hobby of furniture refinishing and restoration into a lucrative flea market business.
No matter what your business, if you operate it out of your home, or headquarter it in a home office and you haven’t considered the need for special insurance coverage, you better talk to your insurance agent in a hurry.
Your homeowners policy, while one of the broadest and most comprehensive insurance policies ever developed, was never designed to include sufficient coverage for business activities.
Some coverage may be included for a certain amount of your business property (computer, filing cabinet, desk, chair, modem), but is usually limited to a small amount at your house, and even less coverage if you take the property away from your house (a laptop computer, for example). If your home business includes selling, it is nearly universal that any items (inventory) you hold for sale will not be covered for any amount. Since these limitations can vary by insurance company and policy, check with your agent for specific details, as well as your options.
Regardless of how much coverage you may have for your business property, standard homeowners policies, with few exceptions, exclude all liability claims arising from your business. For example, one of your business clients comes by your house to sign a new contract for your consulting services. He trips and falls on your front steps and is severely injured. Although your policy’s liability coverage would normally provide you with legal defense and pay such a claim up to the policy limits, in this case the policy will deny any coverage since the injured person was only at your house for business.
This liability exposure represents far too large a risk of loss to leave to chance. What will be the point of all your hard work to develop your business, only to have it swept away in an expensive lawsuit or injury settlement?
Beyond the basic property and liability coverage, your home-based business may also need certain specialty insurance coverages that are also not included in your homeowner’s policy. Examples are professional liability, advertising or publication liability coverage for customers’ property left in your care (for repair or refinishing) and workers compensation coverage for injury to your employees.
Plus add health insurance and retirement plans, and the only practical solution is to talk with your insurance agent without delay. No matter how minor you may consider your business, or how little money it may currently be bringing in, it is better to review your business and future plans with your agent, so that any gaps in your coverage can be discussed and resolved.
If you’ve started a home-based business, you probably are attempting what many never have the courage to dare— pursuing your dream. While you are reaching for the stars, don’t risk having inadequate insurance steal your ladder. At Morrow Insurance Agency, we can assist you with all your insurance coverage needs, from personal, business, to health.