Blog Authored by: Ken Mogren, CPCU
There are more people than ever who work at home or operate small businesses from home. If that’s you and you are relying on your homeowners insurance to cover property and liability losses, chances are you could be in for a costly disappointment. Homeowner’s policies were created for the purpose of covering risks associated with a residence situation and provide very little automatic coverage for occupational and business risks.
Typically, there is a modest amount of insurance on work or business related property in your home, but it would be rare to find a policy with more than $2,500 coverage. There is usually no liability coverage for business related situations, so if a customer or delivery person falls on your steps and sues you; you are on your own. Another nasty provision found in most homeowners policies says that outbuildings used in a business aren’t covered, so if your garage is part of your business operation, it’s probably not covered. And if an employee is hurt on the job, there is no work comp coverage under a home policy.
The solution might be as simple as an inexpensive endorsement to your homeowner’s policy that fills your gaps. Eligibility for this approach varies from one insurer to the next. In general, only businesses with insignificant liability exposures and fairly small need for property coverage can meet their needs this way.
A separate Business Owners policy may be the best and only solution. A conversation with the agent who handles your home insurance is probably the best place to start if you use your home for work or business.