During the COVID-19 pandemic of 2020-21, millions of people found themselves having to adapt to working from home. Indeed, as the pandemic continues to pose challenges for those in any social setting, many businesses have found it both cost-effective and safer to transition to an entirely remote model. As a result, the number of people who will work from home in a permanent or semi-permanent capacity is only anticipated to grow, even post-pandemic.
Perhaps the pandemic has given you the drive to either start a new business from home, or to move your current commercial operations to a more remote model. By embarking on this adventure, you need to recognize that you are opening both your home and your business to an entirely new set of liabilities.
Therefore, you will need to determine how best to adapt your personal and commercial insurance options to cover home-based operations. In reality, there are many different ways to insure a home-based business, and one course might be a much better option for you than another. Let’s take a deeper dive into different home-based business insurance options.
Homeowners Insurance Does Not Cover Home Businesses
There is a difference between working from home and running a home-based business. While everyone might work from home on a regular or semi-regular basis, if you are running a business primarily out of your home, then your home is your company address. Therefore, the success of your business depends upon your security within your personal dwelling.
As a result, you might expect your homeowners insurance to provide coverage for your commercial assets and liabilities. However, you would be wrong to assume that your home insurance provides adequate coverage on a base level.
Your homeowners insurance is not equipped to cover commercial operations and the property associated with it. Therefore, most policies explicitly exclude commercial materials, liability risks and internal issues that might threaten business operations. For instance, while your home’s liability policy might cover you if a neighbor gets hurt in your home, it generally won’t extend to a lawsuit brought by a client who visited your in-home law office and sued you for a professional mistake.
Therefore, you must draw a clear line between professional and personal responsibilities even when your business operates from your home This will help guide you in choosing the appropriate commercial benefits with which to enhance your personal property insurance.
Coverage Options For Insuring Home-Based Businesses
The scope of your home business might be much different from that of your neighbor. Therefore, the insurance options that work for you might be much different from those that work for them.
With the help of your insurance agent, you’ll be able to build the commercial insurance options that will work in tandem with your home insurance to offer you the highest levels of protection.
Most people choose from the three following options to insure their home business.
Homeowners Insurance Business Endorsement
In some cases, you can add a business insurance endorsement to your standard homeowners policy. However, you should consider this the most limited commercial insurance option available, and it usually is only suited to the smallest operations.
Generally, this coverage is designed to provide expanded property insurance that will offer you a better ability to replace commercial materials and equipment following losses. Furthermore, you can often expand your homeowners liability insurance to cover instances related to commercial losses, such as if a client were to get injured while visiting your home.
Home-Based Business Insurance Policy
A home-based business insurance policy is primarily designed to address the fact that eventually, your business will need more than just a basic amount of physical property and general liability insurance. This coverage extends to much more specific commercial loss scenarios.
In addition to equipment, for example, a home business insurance portfolio can extend property insurance to cover vital records and property stored off your primary property. Additionally, you will be able to get a more extensive liability insurance benefit, which can extend to personal injuries or product injuries, to name a few. And some benefits can offer lost income coverage to protect you from loss of profit.
In some cases, you can add this coverage as an endorsement to a homeowners policy. However, the scope of your operations might mandate that you purchase a more expansive, stand-alone policy.
Business Owners Policy (BOP)
A business owners policy
is stand-alone business insurance that is the most expansive coverage option compared to home-based business plans. It is designed to offer small businesses essential commercial insurance options within one policy package and at one price. Generally, your BOP will include property, general liability and business interruption coverage, without making your location (I.e. your home) a factor in qualifying or disqualifying you for benefits.
What’s important to remember is that regardless of whether your business is based in your home, you might still need to carry other commercial insurance options. These might include group health benefits, workers compensation coverage, surety bonds, commercial auto or professional liability insurance. Don’t hesitate to work with your agent to optimize your full benefits portfolio to your advantage.