Caution: Operating A Home-based BusinessAccording to various journaled surveys, nearly one out of every four Americans have some form of home operated business. These business operations range from very small such as tax accounting or repairing services, to larger enterprises including manufacturing and real estate. Mutli-level marketing has prompted many homeowners to operate their own business and some have even taken a hobby and turned it into a lucrative side business.
Regardless of what your business does, if it's headquartered or operated in a home, you need special insurance for this exposure.
The fact is, homeowners policies were never designed to protect business pursuits. While they may be one of the broadest policies ever developed, coverage for business activities is excluded in most standard homeowners policies. There may be a certain amount of coverage for business equipment (such as computers, desks, chairs) but it is normally limited to a very small amount. Items that are being held for sell are universally not covered by any amount. However, these limits and exclusions vary between insurance companies and policies, so check with your agent or read the contract to learn these specific details.
Even if you do have enough coverage for business property, most standardized homeowners polices exclude business liability, except for a few exceptions. This is a very troubling situation for a homeowner who uses their home as a business location. For example, say you bring a client to your home and he accidentally trips on a rug. His injuries would normally be covered by the liability coverage found on your homeowners policy but because he was there only for business, the policy would deny the claim based on this fact. Anyone who brings customers to their home should be aware of this exclusion. Let's be honest, what is the point of operating a business if you risk losing everything from not having the proper insurance?
If you do not have a business policy, talk to an agent right away! In most cases, a specialty policy can be bought for a home-based business. Remember, agents cannot read your mind so be specific to the kind of business you operate and always ask questions! This could prevent possible gaps in coverage that often occur when details are left out.
Owning your own business is a lot of hard work but the rewards are worth the pursuit. Don't risk losing your dream of being self employed by not having sufficient insurance.