There’s no place like home, but working from home can be more complex than firing up the laptop at the kitchen table. Small business owners operating out of their homes need to protect their personal and professional assets against losses from theft, injury, loss of data, or lawsuits. Many home-based entrepreneurs rely on their homeowners policy for protection, but this can be a costly error. Fortunately, several insurance options are available to suit home businesses both big and small.
Home Business Endorsement on Homeowners Insurance Policy
For smaller operations or workers who are employed by another company but work out of their home, a home business endorsement on their existing homeowners policy could provide enough coverage. This is the most inexpensive option with premiums averaging around $100 annually, and is ideal for businesses that don’t require expensive equipment or onsite visits by customers or clients. The general liability (GL) coverage included with a home business endorsement could replace a damaged computer as it’s considered property damage. However, the bodily injury coverage provided in this endorsement is likely not sufficient to cover most claims, potentially leaving the homeowner liable for medical expenses if a delivery driver slips and falls at the front door.
In-Home Business Insurance Policy
A step up from a home business endorsement is an in-home business policy. This type of policy can cover as much as $10,000 in business property and includes general liability (GL) coverage to protect businesses with more foot traffic. In-home business policies can also reimburse for the cost of recovering lost electronic data and will cover lost income and ongoing expenses if the business is out of operation due to damage to the home.
Business Owners Policy (BOP)
Business owners with larger operations, expensive equipment or inventory, or who work off-site should consider a business owners policy, commonly referred to as BOP. Commonly part of a brick-and-mortar business’s risk management portfolio, home-based business owners are increasingly looking to BOP coverage for higher levels of GL coverage. What often sets BOP apart from in-home business policies is the inclusion of professional liability coverage, such as errors and omissions (E&O), and GL coverage for off-premises activities which could incur property damage or bodily injury claims.
Professional Liability Insurance
In addition to an in-home business policy or BOP, home-based business owners are advised to carry E&O insurance or other professional liability coverage to protect from costly claims if they are accused of negligence or failure to perform professional services. E&O and professional liability coverage is crucial for professions such as accountants, attorneys, photographers, architects and engineers, real estate agents, management consultants, and most any industry which provides a professional service.
Small business owners shouldn’t think small when it comes to protecting their business. With a variety of home business insurance policies on the market, a reputable agent can find the right product for clients working out of their homes. Atlantic Specialty Lines has access to several products ideal for home-based businesses and can help agents identify the best professional liability coverage for a host of industries.
Phipps, J. L. (2010, July 30). Working at home? Get home business insurance. Bankrate.com. Retrieved from http://www.bankrate.com/finance/insurance/working-at-home-get-home-business-insurance-1.aspx
Tice, C. (2011, Aug. 10). Does your home business need insurance? Entrepreneur. Retrieved from http://www.entrepreneur.com/article/220125
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