June 7th, 2016
If you’re just starting a new business and you’re running it from home, you’ve probably assumed your homeowners insurance has you covered. And if you’ve worried that it doesn’t, you’ve probably begun exploring different coverage options and maybe even started comparing homeowners insurance quotes. It’s great to be proactive, especially when starting a new venture. But before you sign up for a new policy, make sure you’re getting what you’re paying for.
At CoverHound, we can help you do just that.
With 69 percent of U.S. small businesses starting in the home, it’s no wonder most people believe that their homeowners insurance will cover equipment or product damages in case of a house fire, burglary or natural disaster. However, homeowners insurance covers very little for business equipment and does not support liability coverage, lost data or lost income in the workplace if such events occur. According to the Rocky Mountain Insurance Information Association (RMIIA) it has been estimated that a majority of home-based businesses are underinsured. RMIAA further reports that while most homeowners insurance policies cover damages of up to $2,500 on the site of the business (your home), they only cover $250 off the premises. This means that if you were transporting product and got in an accident, your product would not be insured for its full value.
Because trends are showing that more and more small business owners are working from home, insurance companies have begun to create insurance policies that cater to the the home-based business owner. Called In-Home Business Insurance, RMIIA tells business owners that for $200 a year, you can insure your business property for $10K. What’s more, general liability is included in the plan. If an employee should fall in your home, this plan will cover the expenses. And if your house should suffer damages that temporarily shut down your business, the in-home insurance plan will cover your lost income and payroll.
The first thing you should do is take another look at your current homeowners policy and learn exactly what it covers. After learning more about your policy, ask your agent about endorsements. To get an endorsement on your homeowners insurance, your insurance agency will demand that your business be a certain type. Not all home businesses are covered by a homeowners endorsement. RMIAA says that if you are eligible for an endorsement, you can get higher limits and coverage for certain risks. You can also double your current policy limits to include your business equipment and get coverage of up to $5,000.
Running your own business comes with its share of ups and downs. A real downer is when an employee or customer decides to sue you. 100 million cases are filed in the U.S. every year. This means that encountering a lawsuit in your professional life is very possible, and homeowners insurance won’t be there to protect you. A business owners policy, or BOP provides liability protection, property insurance protection and business interruption insurance. The first of the three (liability) protects you and your company in legal disputes resulting from an unhappy employee or client. Property and business interruption insurance covers your building and inventory from theft, fire or natural disaster. Look at it this way: homeowners insurance protects your home, BOP insurance protects your business.
If you’re starting a new business, you don’t want to go into it unprepared. Let us at CoverHound help you find an insurance package that will support your business and your wallet.