Starting a Home-Based Business? Be Sure to Let Your Insurance Company Know
- Many people are working remotely or want to start a home-based business.
- Commercial activity can affect the type(s) of insurance needed.
- Homeowners must let their insurers know if they're running a business from home.
Don't assume homeowners insurance will cover your business activity.
These days many people want to work from home -- especially as the COVID-19 virus remains a concern with new variants developing all the time.
But whether a person is working at home for an employer or is starting their own business out of their house, it's very important they alert their homeowners insurance provider when their property is being used for commercial purposes.
Here's why calling the insurance company is essential when doing commercial work from home
Anyone who is starting a home-based business or who is storing a lot of business property at their house needs to alert their insurers for one simple reason. A standard homeowners insurance policy may provide little or no coverage for business property. And a standard policy might not offer liability coverage when a property is being used for commercial uses.
This could mean that a homeowner who starts a home-based business is not protected if a client visits, falls, is injured, and files a lawsuit. It could also mean that if valuable business property is destroyed, the owner would get a fraction of the money needed to replace it -- if they had any coverage at all.
Homeowners insurance also would not provide any compensation if the business operations had to cease temporarily due to a problem with the home, even if a substantial amount of income was lost.
This is a huge risk to take on, and most people cannot afford to take the chance of having to pay out of pocket to replace everything their company owns or to cover legal fees and damages if an injury occurs.
How to make sure the right insurance coverage is in place
There are a number of different ways people who run a home-based business could get the proper protections -- but it all starts with reaching out to an insurer to find out options.
The insurance company can explain the limitations of the current coverage so the property owner can make a realistic assessment of what additional protections must be put in place. Many insurers offer an in-home business policy rider or endorsement. This can add coverage for things like more business property, loss of income if the business space is damaged and operations are paused, and liability for damages that occur in the course of business operations.
Some business owners may need to go beyond just getting this type of add-on protection and may need a specialized business owners policy. This is especially true if there is a substantial risk of injury, if there are employees who could be hurt, if the business is very profitable, or if there is a lot of expensive business equipment.
Without contacting their insurer, though, many people who start home-based businesses might not know exactly what coverage they need. They could face a very unpleasant surprise when it turns out they aren't protected when something goes wrong. This should be avoided at all costs, especially when a simple phone call is all it takes to reveal options and get comprehensive protection in place.
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