If you got laid off due to the covid-19 pandemic, then starting a home based business might sound like an attractive alternative to pursuing full-time work. After all, when you work for yourself, you have more freedom, right? Sure, sometimes. If you are in the right industry and have the right niche, then working for yourself can be very lucrative. If you’ve got your mind set on it, then all the power to you!
With this said, it’s important to check with a licensed insurance agent. Why? Well, even if you are going to be working out of a home that you own, you might be surprised to know that homeowners insurance will not always cover you in the event of an accident or loss. If people regularly visit your home to conduct business, your homeowners insurance policy will probably not provide coverage if they are injured. Most standard homeowners insurance policies exclude coverage for home-based businesses and do not cover lost income, lost data, or liability. In fact, some policies consider opening a home-based business to be a violation of the terms.
Insurance Options for Home-Based Businesses
Add Endorsement Coverage to your Homeowners Policy
If you operate a home-based business, you have a few options to make sure you have adequate insurance. One is to add an endorsement to your homeowners policy to raise your limits or to cover specific perils. Some endorsements cover property and provide limited coverage for liability. You may not be able to get an endorsement if your earnings exceed a limit set by the company.
Get an In-Home Business Insurance Policy
Another option is to get an in-home business insurance policy. You can insure your company’s property and get coverage for general liability. An in-home insurance policy will cover lost income, as well as ongoing expenses such as payroll, if your business needs to close temporarily because of damage to your house. It may also provide coverage for loss of documents, accounts receivable, business property located off-site, and equipment use.
Get a Package Business Owners Policy
A third option is to get a package business owners policy, or BOP. This type of insurance is designed for small and medium-sized businesses, including home-based businesses that operate in multiple locations or manufacture products at another site. A BOP can cover damage to your or your customers’ property caused by a fire or natural disaster, loss of income, extra expenses, and liability.
A BOP can provide coverage for a business interruption, damage to equipment, loss of data, malpractice, and professional liability. A BOP is a good choice if your business stocks inventory, makes products, conducts business both at your home and in other locations, or has a high risk for professional liability.