Just because you operate your business from your home, doesn’t make it any less of a “real” business, and real businesses need insurance! According to the Independent Insurance Agents & Brokers of America, a whopping 60 percent of home-based businesses lack sufficient insurance coverage.
Here are a few insurance considerations if you work from home.
Don’t Rely on Homeowner’s Insurance
Your Rhode Island homeowners insurance policy protects your home, but not if someone hurts themselves when they’re doing business with you. It probably won’t cover your business equipment, data, or stock either. If you carry a large inventory, or use expensive, specialized equipment, you can’t afford to ignore the risk.
Many insurers will cancel homeowner’s policies if you claim for losses from an undisclosed home-based business, or refuse your claim.
Tailor Insurance to Your Needs
No two businesses are identical and neither are their risks. Many home-based businesses do not have many people visit their premises. If this is you, why would you pay the same amount as a business with dozens of people passing through their doors?
Additionally, buying just any generic policy can leave important risks specific to your business unaddressed. Tailoring your policy to your unique business ensures you pay less for superior protection.
The following coverages may be appropriate for your business, but discuss your coverage with your agent or broker. The least expensive isn’t always the right choice and neither is the most costly.
Rider on Homeowner’s or Renter’s Policy
This is a possibility if you run a one-person business, do not use valuable equipment, and have low foot traffic. It’s is the least expensive (about $100/yr.) and typically offers about $2,500 of additional coverage. The home based business rider for a homeowers policy will extend liabiltiy coverage to your business. However, it may not provide sufficient liability protection from the costs associated with lawsuits. Many home policies only have a $300,000 or $500,000 liability limit which may not be enough for your business. Discuss your options with your agent at Loiselle Insurance.
Business Owner’s Policy
For most small businesses or home based businesses, a business owner’s policy (BOP) offers the best protection and value. A typical BOP covers business equipment and contents, general liability, loss of records, loss of income due to a covered claim, and professional liability claims. Business owners policy premiums start at $500 but may average $1500-$2500 for the average home business.
General liability insurance is included on a BOP or can also be purchased as a stand alone policy. General liability is very important since it protects your business from claims arising from injuries or property damage to a third-party and libel and slander. General liability limits range from $500,000 to $2,000,000 or higher. This coverage also includes products and completed operations liability which is important if your product (or in the case of contractors, your completed work) causes bodily injury or property damage to someone in the future.
Professional liability insurance is important for companies that provide services or expert advice for a fee. This can include a web developer, graphic designer, IT consultant, financial consultant, counsellor, wedding planner, accountant, architect, lawyer, hair stylists, and more. Clients expect these professionals to meet the standards of care in their industry. If a client objects to the service you provided, or failed to provide, because it did not have the expected or promised results, they might sue whether it is a valid claim, or not. Professional liability insurance pays for legal fees, up to the policy limit.
Small companies grow and their insurance needs to grow with them. An annual insurance review with your agent or broker can reveal insurance gaps or a better policy for your business. They may also be able to bundle commercial auto insurance with your company’s insurance policy for savings.