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Living Space & Livelihood: Is Your Home-Based Business Insured?

Living Space & Livelihood: Is Your Home-Based Business Insured?

Do you work out of your home for your primary job – or even as a supplemental income source? If the answer is yes, read on. From Etsy crafters to at-home accountants to skin care consultants, a new in-home business launches every 12 seconds.

With about 38 million home-based businesses in the United States, you know the flexibility and perks of working from home can be hard to beat. But do you know that your home insurance doesn’t necessarily protect your business, no matter how small? In fact, if you operate any type of business from your home – whether it’s day trading or selling leggings to friends and family – you may actually have little or no insurance coverage. And that can turn an income source into a potential liability, fast.

What should you look for in a home-based business insurance policy? It can be complicated – which may be why so many people don’t have the insurance they really should. Franklin Mutual Insurance, NJ’s premier home insurance provider, breaks down coverage terminology options here:

  • Comprehensive replacement cost coverage for your home business property. This coverage includes business personal property and any home business property or inventory held for sale or delivery after sale. This also includes personal property owned by others in your care, custody, or control for business purposes.

Example: A burst pipe damages a wedding photographer’s camera equipment and a client’s wedding album. Comprehensive replacement cost coverage to the rescue.

  •  Coverage for related structures used for home business. This coverage includes business inventory that is stored in a garage.

 Example: An at-home beautician has expensive hair product in her garage and the garage collapses under heavy snow. You’re covered.

  • Loss of income and extra expense protection. This covers loss of business income that would have been earned and related incurred expenses during a necessary interruption of home business, or when the premises is unfit for occupancy.

 Example: A part-time music instructor who gives lessons at home can no longer work because of a house fire. Loss of income and extra expense protection can help out during a painful time.

  • Business liability. Coverage that can protect you from a variety of general claims, including bodily injury or property damage to others that can arise from your business operations.

Example: When a customer returns to retrieve Rover from your at-home pet grooming business, they slip on your front porch and severely injure themselves. Business liability insurance protects your assets from the pet owner who deems you responsible for their misfortune.

  • Money and securities coverage. This coverage protects insured monies against loss by theft, disappearance, or destruction both on and off-premise.

Example: A handmade jeweler keeps the cash from her jewelry sales in a small safe in her home office. Once a week, she deposits the cash at a bank. If the home is robbed and the safe containing the cash is stolen, she’s protected. Or, if her purse is stolen on her way to the bank, she doesn’t stand to shoulder any financial loss.

  • Valuable papers and records coverage. Covers the cost to reproduce most printed documents in the event of an accident.

Example: An architect’s blueprints are damaged due to a burst pipe. He can claim money for time already spent on the project.

  • Property of others coverage. Covers situations where personal property is temporarily in the care or custody of another person or entity.

Example: As a tailor, you handle others’ personal property regularly. Unfortunately, after a small fire broke out, smoke damage compromised some of your clients’ belongings. In an event like this, property of others coverage will be of benefit to both you and your client.

FMI also provides the ability to customize the policy for your needs:

  •  Computer and software coverage. Covers digital hardware and software in the event of damage to your valuables during the course of business.

Example: After offering a prospective client a glass of water, they clumsily spill it on the laptop you use for presentations. With computer and software coverage, there’s no need to frantically pat and blow-dry the keyboard in hopes the machine wasn’t fried.

  • Professional liability coverage for certain professionals. Covers a client when a business owner renders a professional service and an accidental mishap occurs. Consult your local agent to find out which professions are covered.

Example: A beautician accidentally burns a client’s scalp during a hair treatment. After innumerable fruitless apologies, you can rest easy knowing you’re covered in case the customer intends to seek payment for damages.

  • Excess liability coverage included in your homeowners’ policy. Everything you need for homeowners, business and excess liability coverage, all under one policy.

 Example: In case a catastrophic claim comes your way from any one of countless scenarios, excess liability coverage puts a limit on top of your underlying policy. 

 Eligible businesses include accountants, dentists, doctors, chiropractors, graphic artists, pharmaceutical representatives, financial planners, internet sales, and more. Additionally, home-business owners who provide their service outside their home—such as photographers, dance or music instructors, and multi-level marketing representatives—are eligible.

 Not sure if your business is eligible? Find your local agent here.