Many business owners believe they have automatic coverage from their Rhode Island homeowners insurance policy for their small home based business. However, the reverse is actually true. Most policies specifically exclude business pursuits.
Without proper insurance coverage, they may be liable for damage or injury if something occurs while conducting business on or off their property. Examples of potential issues include a client slipping and breaking their arm and business property destroyed by lightning or stolen, just to name a few risks.
Luckily, business owners have several options.
Homeowners Insurance Policy Endorsement
Every policy is different, but generally most only offer modest protection for equipment of up to about $2,500. This amount would have to cover your computer, printer, office furniture, and inventory.
Your policy may also offer you up to about $750 for property you use outside of the home for business. However, it will not cover you for liability issues, lost income, or lost data.
Nonetheless, you may be to increase your property coverage limits to $5,000 by adding an endorsement to your homeowners insurance policy. This may be sufficient for a very small home-based business if:
- Clients do not visit your home
- You have little business property stored at home (under $5,000)
- You use minimal property for business outside of home (under $750)
In-Home Business Policy Endorsement
An in-home business insurance policy endorsement offers more liability and business equipment coverage than a homeowners insurance policy. Typically, it will also reimburse you for lost papers and records, off-site business property, and accounts receivable. Some will also reimburse you for lost income when your home is severely damaged and you can’t operate your business. They may also pay for a temporary business location until your property has been restored.
However, these policy endorsements can vary greatly between insurers. Check with your insurance agent or give us a call so that we can find one that suits your needs.
Business Owner’s Policy
Your homeowners insurance policy only offers limited liability protection for specific incidents. This does not extend to business-related incidents.
Business owners should consider this policy if they:
- Provide services directly to their clients in their home, such as consulting, tax preparation, or hair services
- Have more than $5,000 worth of property in their home-based business
- Rely on their home-based business as a major source of income
Insurance needs can be affected by many factors and some you may not have considered. The following are just a few that could affect the type of policy you need.
If you already have a policy or endorsement, does it reflect your current needs? Perhaps you bought a vehicle to use for your business and now need an auto policy. Perhaps your employees now drive their own vehicles for business and need Extended Non-Owned Coverage.
If you are a doctor, lawyer, accountant, physician, counsellor, or other professional you need additional coverage to protect you against client negligence, malpractice, or misrepresentation claims. This coverage is not provided under homeowners insurance endorsements, in-home business policies, or business-owners’ policies.
Successful businesses proactively protect their interests and seek expert advice. Insurance isn’t a luxury, but a necessary piece of protection. Give us a call today so that we can help you find the best coverage at the best possible price. Good coverage is more affordable than you might think.