If you’re a freelancer, consultant, paid blogger, e-retailer, or one of the many other people who operate a business from their home—even a simple, part-time one—you need to know what your Home Insurance Policy will, and will not, cover in the case of fire, theft, injury, or other risk exposures.
Some key questions and considerations to keep in mind:
Personal Injury
Do customers or colleagues come to your home? Even if you answer “no,” you need to consider all situations where someone could be injured while on your property for business purposes or as a result of using a product you sell.
Say someone falls on your driveway while delivering business supplies or picking up an order to ship. Or a contractor—or even a friend—injures herself while helping to install or fix your computer. You could be liable for their injury.
What if you sell homemade soaps and skincare products that may cause a rash, or make crafts that may splinter, causing a wound or infection to one of your customers?
Can you afford to pay their medical bills? Having the right insurance will give you peace of mind and protect you against such liability exposures.
Loss of Business Equipment or Inventory
Your Home Insurance Policy may cover you for a limited amount of equipment or inventory loss, but it might not be enough.
Take Matt, for instance. A freelance graphic designer, his home office includes a laptop plus a desktop computer with a wide-screen, high-res monitor, backup drives, and a large printer/copier with advanced graphic features. His shelves are stocked with office supplies, ink/toner, art supplies, and expensive reference books.
Then there’s Macey. She makes high-end wooden boxes, which she sells on Etsy and at local crafts fairs. She uses hand-held, circular, and scroll saws, a router, a lathe, and other equipment to make the boxes in her basement.
She keeps a small inventory of finished products on hand, along with a good supply of high-quality wood, stains and finishes, hinges, and semi-precious gemstones and metals used for inlays and adornment.
While Matt’s and Macey’s Home Insurance Policies would probably cover some of their equipment and/or supplies, they might not cover everything they use or store for their businesses.
Worse, because the existence of a business in one’s home is not contemplated when a Home Policy is issued, it actually may invalidate one’s Home Insurance entirely.
Loss of Confidential Information
If you keep clients’ financial, personal, or other confidential information on your computer or on the Cloud, the release of such information due to theft or by other means could put you in hot water—and the resulting costs could be staggering.
Solutions
Depending on your specific needs, you might consider one of these insurance options for your in-home business:
- An “endorsement” on your Homeowners Policy.
This amended or clarifying language added to your existing policy enables you to target a specific need or exposure, customizing your insurance to fit your needs. - A stand-alone Home-Based Business Insurance Policy.
Depending on the scope of your needs, this option may provide a wider range of protections at a more economical price than separate endorsements. - Business Owners Policy.
This combines several types of coverage for a full range of risk exposures and may become more important as your business grows.
As you can see, even the simplest in-home business can present complex insurance and liability issues. Your best defense is working with your insurance agent to explore your needs and navigate your options.
Paul & Dixon is here to help!
Visit our website for more information on Business Insurance risks and issues, and contact us to schedule a professional review of your needs and options.
