Your home is your castle, but it’s also where you make your gold. So, when you run your business out of your home, does that mean you need more than a standard home insurance policy?
The short answer is: yes. Running a home-based business requires special considerations—business matters that aren’t covered under your personal home insurance coverage.
For instance, your home insurance is not designed to provide sufficient coverage for business-related equipment and goods. This is especially true if the business you operate means you keep valuable stock on the premises of your home, or your company requires you to store and run expensive equipment in your home in relation to your business activities.
Of course, some property coverage is available through your current home insurance policy, but there’s usually a limit to how much will be covered under this insurance policy and, typically, it rarely comes close to how much it would cost you to replace all your business items should they be damaged, destroyed or stolen from your home office.
Another reason why you should seriously consider paying for a home-based business insurance policy is that most homeowner insurance policies will not cover business property that leaves the home-based business premises. So, if your laptop and camera are in your car and stolen while you’re at a client’s house, your home insurance won’t cover this loss. A business property policy, however, would provide full coverage for all of the important and valuable property owned by your business.
Another advantage to business insurance is that it can be tailored to your specific needs. For instance, if you anticipate greater risk of being sued—say, for instance, people are constantly trying your product and risking an injury—than you can increase the business liability portion of your business insurance policy. This is particularly important since most home insurance policies won’t extend the liability coverage to risks that are associated with operating a business.
Also a business policy can provide coverage to home-based businesses where customers come into your home for goods or services. That’s because if a customer were to injure themselves while in your home, your homeowner’s insurance would not cover the medical and legal bills associated with this liability. A general liability policy could protect you, but without it you could risk losing your entire business and more.
Ask yourself the following questions to find out whether or not you need to talk to your independent insurance broker about a business insurance policy:
Does your homeowner’s policy limit coverage of business stock and equipment? By reading your home insurance policy carefully you can easily determine whether or not a fire or loss would cap your losses, leaving you to pay out-of-pocket to replace the remaining tools and equipment used for your business. Another good reason to read your homeowner’s policy is that some providers actually consider operating a home-based business a violation of the policy terms. To keep your policy coverage in place and with the right amount of coverage, be sure to read the limits and coverage exclusions and then get additional coverage, as needed.
Do you have an office but work from home regularly? Even if your employer’s office is locate elsewhere, if you regularly work from home you may need additional coverage to help protect yourself from work-related incidents that can occur in your home.
Do clients, business contacts or other employees visit your home? Many home-based business owners are surprised to learn that their homeowners policies often don't cover third-party injury claims related to their work. If you have people visiting your home for business-related activities, you’ll need to pay for additional coverage to protect yourself and your work.
Do you conduct business in other people’s homes? Since most homeowners’ policies don't cover third-party injury claims when related to work you’ll need to get business insurance to protect you from liability claims when working in other people’s homes.
Nobody wants to risk losing everything they’ve worked so hard to build, so it’s important to inform your home insurance provider as soon as you consider operating a home-based business. Failure to do so can void your policy, leave you without coverage when you need it most, and even prevent you from being able to renew your home insurance coverage in the future. The good news is that business insurance can be tailored to suit your needs. Let an insurance professional help you find the right coverage at a cost-effective price.
Note: Members of The Chef Alliance are covered by Liability Insurance, which is included in their membership benefits. For more information, please contact our Success Managers.