Working from home can be incredibly satisfying. But did you know it may inadvertently put your entire business (and life) in a bind if you’re not adequately prepared? If you’re one of the 38 million CEOs running a home-based business, it’s imperative to know that your home insurance may not provide adequate protection for your business, no matter how small.
Too many at-home CEOs aren’t aware that there are gaps in their coverage until they’re presented with a tough situation. Your inventory and business property can literally go up in smoke, be ruined by a water leak, or be outright stolen. And if you are relying on homeowner insurance, you may be shocked to find that you have very little financial recourse.
So what should you look for when having your homeowner policy endorsed for your business? It’s not always obvious—if you operate or conduct any sort of business out of your home, be sure your insurance partner offers some, if not all, of the following coverage options to best protect your interests.
1) Replacement Cost Coverage for your Home Business Property. This covers business personal property and home business property or inventory. It also includes personal property owned by others in your care, custody, or control for business purposes.
2) Coverage for Other Structures on your property used for Home Business. Made for businesses that store their work-related material in a free-standing garage or other structure on their property. Direct sellers for multi-level marketing brands often have a supply of expensive cutlery, candles, skin care products, detox teas, etc. in their garage.
3) Loss of Income and Extra Expense Replacement. As an option to guard against downtime, this protection covers loss of business income that would have been earned (and related incurred expenses) during an interruption of home business, or when the premises is unfit for occupancy due to a covered loss.
4) Business Liability. Protect your business from a variety of claims, including bodily injury or property damage to others that can arise from your business operations. This type of coverage can shelter your assets, keeping them beyond the reach of a legal action.
5) Money and Securities Coverage. The big one! This coverage protects insured monies against loss by theft, disappearance, or destruction both on and off-premise. This is crucial for any cash-based business.
6) Valuable Papers and Records Coverage. Especially useful for CEOs of graphic design businesses, this covers the cost to reproduce most printed and electronic documents in the event of an accident.
7) Property of Others Coverage. Do you handle your clients’ personal belongings regularly? Consider opting for a policy that covers situations where personal property is temporarily in the care or custody of another person or entity.
8) Computer and Software Coverage. If you’re an ever-hustling CEO in the tech industry, be sure your insurance covers digital hardware and software in the event of damage to your valuables during the course of business. Something as simple as spilling a glass of water on your laptop can turn into a business disaster without the right coverage.
9) Professional Liability Coverage for Certain Professionals. For many professions, there’s coverage for when a CEO renders a professional service and an accidental mishap occurs. For instance, if an at-home barber accidentally cuts a client’s scalp and the client intends to seek payment for damages.
10) Excess Liability Coverage Included in Your Homeowner Policy. Consider an option that has everything you need for homeowner, business and excess liability coverage, all under one policy. In the event a catastrophic claim comes your way, excess liability coverage puts a limit on top of your underlying policy.
Home-based business insurance picks up where homeowner insurance comes up short. So no matter what business you’re leading, make sure you’re covered. After all, your home is where your work gets done, not what does your work in.
This guest post is courtesy of Gary Capone, CPCU, ARM. He is Vice President of Field Services, Franklin Mutual Insurance (FMI), where he is responsible for Agency Relations, Marketing, and Loss Control. He has over 36 years experience in his industry, where he began as an insurance agent in 1981. Gary is active with the Independent Insurance Agents and Brokers of New Jersey, a Chartered Property and Casualty Underwriter, and has an Associate Risk Manager designation.
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