Times have changed, and our world is shifting to a more digital approach to business. Many people are now teleworking from home or running their own business. For the latter situation, it’s essential to consider home-based business insurance.
Make sure you have the protection you and your business deserve. Check in with the experts at Lake Region Insurance Agency for a complimentary policy review and quote. We are here to serve our Greater Minnesota neighbors.
What Counts as a Home-Based Business?
What do Purex, Apple Computer, Hallmark, and Baskin-Robbins have in common? They all began in someone’s home, basement, or garage. So if you have a home-based business, you are in good company.
And you aren’t alone, since roughly two-thirds of all companies begin in a house somewhere.
Running a home business has tax, liability, and insurance implications, so it’s critical to know if you fall into this category. Some examples of home-based businesses include:
- Pet Sitting
- Dog Grooming
- Freelance Writer
- Professional Consultant
- Web Designer
- Online Clothing Boutique
As more and more owners shift to the virtual business model, the list of work-from-home companies continues to grow. If you fall into the category of a home-based business, you need to investigate your insurance requirements.
Isn’t My Homeowners Policy Good Enough?
Many people who run a business from their house mistakenly assume that their homeowners insurance provides sufficient coverage. Unfortunately, this is rarely true.
For businesses with minimal equipment and no client foot traffic, a homeowners plan might be enough. But this is a rare situation and still warrants a chat with your agent to clarify your coverage.
If you regularly receive clients in your home or store inventory on-site, you likely need home-based business insurance. Your standard homeowners plan probably doesn’t adequately protect your business.
Be sure to talk with your independent agent to determine what supplemental or separate protection you need to protect your hard work. From property to liability insurance, you need to make sure you have sufficient coverage.
When you rent rather than own your home, you also need to verify your coverage. Just like a homeowners policy, a renters policy will not fully protect your home-based business.
Limitations of Homeowners Insurance Coverage
Most homeowners insurance policies have limits and exclusions that could leave you and your business unprotected. Typically, homeowners and renters insurance policies lack the following:
- Protection for business documents and records
- Sufficient coverage for loss of files and data
- Liability coverage if an employee or client sustains an injury in your home
- Adequate replacement protection for business equipment
- Coverage for lost revenue if something prevents you from running your business from your house
There are many common scenarios when a business owner may run into one of these limitations.
For example, let’s say that you are the victim of a home robbery, and they steal your business laptop, desktop, and monitor. Most homeowners policies will limit this business coverage to $2500. Anything beyond that will have no protection without a home-based business insurance policy.
Or imagine that a client is at your house for a meeting, and they trip and fall, breaking their arm. If this were a neighbor visiting for fun, your homeowners policy would kick in. But because this is a business relationship, you are out of luck.
You’ve worked too hard to leave your business unprotected. Make sure you get a sufficient policy in place.
You probably need a business insurance policy if:
- You conduct business in your house, including receiving clients.
- You have employees.
- You store inventory in your house.
- You have business-related equipment, such as computers or cell phones.
- Your company owns one or more vehicles.
- You store sensitive data.
- You rely on your business income to pay your bills.
What Should a Home-Based Business Insurance Policy Cover?
When speaking with your independent insurance agent, you should discuss coverage for all of the following needs.
As mentioned, most renters and homeowners plans have strict limits on what they will replace from a home-based business. Typically, business equipment far surpasses that amount.
Additionally, a homeowners policy only covers equipment if it’s in the home. If your business laptop is lost, stolen, or damaged while you’re working in a coffee shop, you won’t have coverage.
Do you use your vehicle for business activities? Your car insurance policy may not cover you if something happens while you’re conducting business. Business auto insurance is a crucial component of your coverage.
General liability coverage protects you if a client or employee gets hurt in your home office or on your property. It can also cover an employee who sustains an injury off-site while conducting company business.
Product liability is necessary if you sell physical products. This plan protects you if an item doesn’t work correctly or harms a person or their property.
Professional liability insurance offers protection for service-based businesses. This coverage can kick in if someone claims damages stemming from your services or advice.
Since legal and medical bills can escalate quickly, adequate liability coverage is crucial for your business.
Cyber liability insurance is critical for most businesses today. Unless you operate solely with paper and pencil, you should consider this type of policy. It protects you against losses stemming from hackers and data breaches.
Any business that relies on electronic storage or transmission of client and company information should have this coverage in place.
Consider an Endorsement
In some situations, you may not require a stand-alone home-based business insurance policy. Talk with your agent to see if an endorsement makes more sense for your needs.
For example, for a small additional fee, you may be able to raise your homeowners policy limits for business coverage. Typically, an endorsement is only available to businesses that have few or no on-site visitors.
Get the Perfect Policy
Do you have any questions about your homeowners insurance policy and how you can protect your home-based business? The independent agents at Lake Region Insurance Agency are here to help.
With offices in Cokato, New London, and Willmar, MN, we can meet your personal and professional insurance needs. Reach out today to get started.