Now more than ever before, people are choosing to work from home or even run a small business from a garage or spare room. There’s a certain freedom that comes with being your own boss — but there can be significant risks as well. In some cases, there may be supplies, materials, or inventory that needs to be protected and in all cases, there’s also business-related liability to consider.
It's common to think that your home insurance covers all the things in your home and that the liability coverage on your home insurance policy protects you against bodily injury lawsuits. Both of these things are only partly true. Your home insurance policy does provide coverage for most personal property, but business property coverage may be limited or sometimes not covered at all. The personal liability coverage on your home insurance policy has similar limitations. Many liability risks resulting from personal actions are covered by your policy. However, liability resulting from business-related activities may not be covered.
Some insurers offer a home-based business policy rider, which is an add-on that extends new coverages on your policy for some business-related risks — but not all risks. For example, you can expect inventory to be excluded from coverage as well as professional liability, the latter of which is an important consideration for anyone providing services or advice to clients. Home-based business insurance riders often aren’t the best fit or may only offer a partial solution. The best strategy is to meet with your agent or broker to discuss your specific needs.
If your business has inventory, you may need a business owner’s policy (BOP), which bundles several key coverages including business property coverage, coverage for business-related bodily injury liability, and business interruption insurance. Typically, the cost of the combined policy is less costly than if you were to purchase each insurance coverage separately.
To fully protect your business and personal assets, your business coverage needs to consider the type of business you do and the risks that are unique to your business. An off-the-shelf solution from the cheapest advertised provider may leave costly gaps in coverage that aren’t always obvious — until there is a claim. Imagine a six-figure lawsuit being filed against your business due to an error and then learning that the policy doesn’t provide coverage.
The good news is that business insurance costs are often closely related to revenue, which means your coverage is more affordable as your business is in its early growth and cost increases are linked to a corresponding increase in top-line sales. If you need coverage for your home-based business or even if you already have a policy, reach out to your agent or broker to discuss your needs and your plans for the future. Having the right coverage in place can help ensure that your business can go the distance without putting your personal assets at risk
Our Insurance Advisors are here to help find the policy that is right for you. Call your advisor today to learn more.
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