If you have a home based business, protect yourself

There are a BOATLOAD of home based businesses out there. Do you have one? If you make over $2000 a year with it, then yeah, you have a home based business.

Why Am I Exposed With a Home-based Business?
Most Home-based Business owners make the disastrous mistake of assuming that there Homeowners Insurance will cover them in the event of a accident, injury, or loss. We all know what happens when you Ass-U-ME…

The truth is, if you are running a business out of your home and there is a claim resulting from anything having to do with that business there is a HIGH likelihood your claim is going to be denied. Your Homeowners policy is NOT intended to cover business exposures.

Home-based Business Misconceptions
(Please see this article by IIABA for more details on Myths of Home-based Business. I have outlined the ones I feel are most crucial)

“This is not a business its just a hobby. I don’t make much money.”
For most homeowners policies if you make more than $2,000 a year you’re running a business and the claim will most likely be denied.

“I have a Incidental Business Endorsement on my homeowners policy. I’m all set”

The Incidental Business Endorsement to a homeowners policy is used for exactly what it says “incidental business.” The lawyer that occasionally brings his work home. An accountant that will do some tax-returns from home. NOT the guy doing woodwork in his garage creating dressers as a side job. NOT the Mary Kay saleswoman who is having home parties twice a month. These are not incidental exposures and there will be gaps and limits to the coverage provided in the event of a loss.
Additionally, this endorsement does not cover anything (liability or property) Off-Premises. So if you are delivering that hand-crafted dresser you just built for your neighbor down the street and get into a car accident that ruins the dresser… You’re getting Bupkis… Nada…

“I never have anyone in my house for business purposes so I don’t need liability.”
Do you ever have materials for your Home-based Business delivered? If that delivery person slips and falls you are most likely SOL… Do you ever go Off-Premises for a trade show, delivery, conference, seminar, client call, etc? You guessed it, you don’t have Off-Premises liability.

OK, My Homeowners Doesn’t Cover Home-based Business, Now What?
You need a Home-based Business Insurance Policy. Now before you get all fired up that an Insurance Salesman is trying to sell you another insurance policy realize that most Home-based Business Insurance policies run between $150 and $350 a year.  This can vary, based on the type of business that needs to be covered. That is NOT a lot of money for coverage they provide considering you get Liability, Loss of Income and Business Property… I think the sustainability of your business is worth that kind of investment. Do you?

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