As the pandemic has changed the way we work, many individuals have turned to starting home based businesses to help supplement their incomes. Whether it includes those involved in real estate sales, or the sales and distribution of products and services on a part time basis, more and more individuals are choosing to keep costs low by making their business home-based. If your home based business is your main source of income it is imperative that you consider the risks which may not be covered, even under an amended Homeowner policy. Here are a few:
- Business-related personal property (equipment and furniture) in excess of the Homeowner Policy limitation – both on and off premises
- Inventory you store or have on hand
- Business property of others while in your care or under your responsibility
- Accounts receivable
- Valuable papers and records
- Electronic data coverage
- You may need liability to extend to personal injury, products and completed operations, incidental contractual liability, and general commercial liability.
- Automobile – If you are driving people around for business reasons, transporting supplies or products or visiting customers your personal auto policy may not provide coverage.
Most of these additional risks and more can be covered by purchasing a Home Based Business policy. These policies usually allow for up to 3 employees and will allow more adequate limits of protection for liability and property.
If your home business is your primary source of income you will want coverage for business interruption and extra expense. Fortunately, this protection is usually included in a Home Based Business policy. There are a few other kinds of insurance you should be thinking about as well.
- Disability Insurance – If you become disabled and are unable to work and generate income, this insurance will help to keep you “paid” during that period. It won’t cover ongoing business expenses, however.
- Life Insurance – Many employers provide at least some life insurance protection to their employees. Since you are the employer, you are on your own on this one. Life insurance is also used as a vehicle for perpetuating a business in the event of the death of an owner; this is sometimes known as Key Man Life.
- Health Plan – The same thing applies here as to Life Insurance. If you don’t have an employer supplying or subsidizing this important protection for you, you’ll need to get it on your own.
- Workers Compensation — All states require employers, even home based ones, to purchase Workers Compensation if they have employees. Workers compensation insurance offers a schedule of benefits for employees unable to work because of a job or workplace related injury or illness.
Most Home Based Business Insurance policies assume most of your business is done from home. If that is not the case, you may need a type of policy that will provide coverage for you as you work away from home. There are also limits for Home Based Business policies regarding number of employees and maximum protection limits for Business Personal Property, Business Interruption and Loss of Income and other risks. If you find your business has is growing beyond the kind of protection a Home Based Business Policy can provide you may need to consider a Business Owners Package policy.
If you need assistance determining which policy is right for your small or home-based business, reach out to the experts at Commercial Brokers of America.