Homeowners Insurance Does Not Protect Your Home-Based Business

Last year saw a record number of Americans lose their job due to the coronavirus pandemic. Perhaps you were one of them and decided to start your own business from home. Another possibility is that you already operated a business and recently decided to move your operations home. Whatever your situation, it is important to make sure that you have the right home-based business insurance from the start.

Understanding Home-Based Business Insurance

A common assumption among business owners who work from home is that their homeowners’ insurance policy will cover claims related to their business. The reality is that the typical homeowners’ insurance policy provides no coverage or limited coverage for business-related claims. Examples of scenarios that would require you to file a claim for your home-based business include:

  • You operate an online store and keep your inventory in a separate bedroom. Part of the house starts on fire and destroys your entire inventory. You would have to pay out-of-pocket to replace most of it with only a homeowners’ insurance policy.
  • A client agrees to meet with you at home and trips over a toy one of your kids left on the steps. As a result of his significant injuries, he files a personal injury lawsuit against you. Depending on the success of the lawsuit and the amount, it could force you to access your retirement savings or other investments to pay the client’s medical expenses.

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Having home-based business insurance in these and similar situations is essential to protect your business and its assets.

Types of Home-Based Business Insurance You May Need

The following are examples of home-based business insurance policies to consider based on your unique needs:

  • Business Auto: You need business auto insurance if you plan to make or deliveries or meet with clients outside your home. Even though you have personal auto insurance already, it will not cover claims made when using your car for business purposes.
  • Business Property: The example of a fire destroying business inventory above is a prime reason why you need a business property insurance policy. When setting up the policy, ask your agent to explain and recommend whether you should choose replacement cost or actual cost coverage in the event of a loss.
  • Liability: The client who injures himself visiting your home is an example of the need for liability coverage. You would receive no coverage or limited coverage under your homeowners’ insurance policy, potentially leaving you on the hook for hundreds of thousands of dollars in medical expenses.
  • Professional Liability: If you work as a lawyer, accountant, or perform other types of professional services, this policy offers protection beyond a general liability policy. The latter does not pay claims for malpractice, negligence, or other serious allegations a client could make against you as a professional service provider.
  • Product Liability: This coverage protects you from financial loss if a customer claims injury due to a product you created or supplied through your home business.

Contact InsuranceHub for a Free Home-Based Business Quote Today

We want to make the process of obtaining home-based business insurance simple and affordable for you. That is why we do the research to compare policies and present you with the results. To request a free quote, complete this form or call us at 770-497-1200. We look forward to assisting you with your business insurance needs.