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Summer 2018  Volume 14, Number 2        

How to Protect Your Home-Based Business

Most homeowner's policies exclude claims resulting from "business pursuits."

This means they will not cover any business-related claims, even if they occur on your property. So, if a client slips and falls while visiting you, your policy would not cover the cost of treating her injuries...or the resulting negligence lawsuit. Your policy also will not cover business personal property that gets lost or damaged on your premises. This could leave your computers and other valuable business equipment without coverage. Even if you claim your computers as primarily for personal use, most homeowner’s policies provide only up to $2,500 in coverage for electronics.

Three Main Options:

  1. Add a "permitted incidental occupancies" endorsement to your homeowner's policy to include your business and increase the coverage limit on furnishings, supplies and equipment from $2,500 to whatever your homeowners policy's Coverage C limit is. Keep in mind that it won't cover liability claims that occur outside the home.
  2. Buying separate policies for business property, commercial general liability and business income protection, which allows you to tailor coverage to your specific needs.
  3. You could also buy a business owner's "package policy," or BOP, which combines property and liability coverages, including automobile liability. Some insurers even offer "entrepreneur" packages designed specifically for small, home-based business enterprises. Many business owners find these more economical than buying separate policies.

Some home-based businesses need coverage that goes beyond the business owner policy.

  1. If your business has employees, you need workers' compensation coverage. Most states make workers' compensation elective for sole proprietors, partners, employed spouses or certain classes of corporate officers. Classifying employees as independent contractors does not always protect you from claims — independent contractors can file workers’ compensation claims if they meet the definition of an employee. A minimum premium workers' compensation policy can give you protection and peace of mind.
  2. You may need professional liability or errors and omissions coverage. General liability and business owner policies exclude liability arising out of the "rendering or failure to render professional services." If you give advice and recommendations, if you create programs or products for your customers or if you provide a service, you need liability protection. Low-risk businesses can buy "errors and omissions" coverage at a reasonable cost.

No matter what type of home-based business you have, we can help you protect it with the right insurance coverages. Please call our office for more information.

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In this issue:

This Just In...

9 Tips for Hiring a Home Repair Contractor

Are Your Jewelry Items Insured for Their True Value?

How to Avoid Becoming a Fake Accident Victim

How to Protect Your Home-Based Business



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