Are you an entrepreneur running a home-based business? Do you sell products out of your home? If so, you should look into your homeowners policy to avoid coverage gaps. Most homeowners policies limit the amount of coverage available for property on the insured premises used primarily for business purposes. You need to ask yourself how much would you lose if your home office is destroyed by fire or flooded.
If you operate your business out of your garage or barn, you’ll need coverage for “other structures.” Homeowners policies vary in what coverage they provide for such structures, depending on whether they are used for storage of business property or actively used to conduct business.
Are you a home-based business owner? You need to confirm whether your homeowners insurance policy covers accidents or injuries that occur at work – that is, at your home. For example, are you liable for injury to a package delivery person who slips and falls on your icy sidewalk while walking to your front door with a work-related package? Depending on the terms and conditions of your policy, the answer might be “yes.” If your policy doesn’t cover the injury, you’ll be paying out of pocket.
What would happen if you couldn’t work out of your home office because of a fire or flood or you have no power for several days because of a storm? You would have no coverage for the loss of your business income without an in-home business endorsement, Businessowners or commercial policy with business interruption coverage.
Remember that your home-based business is attached to your homeowners coverage and is subject to the same exclusions. If your home isn’t covered by flood insurance, neither is your business.
If you repair computers or furniture for customers at your home, you need to ask your insurance broker whether damage to the customer’s property is covered. If so, you should ask how the value of the property is calculated and how any potential loss will be settled.
If you telecommute or work remotely for an employer, the insurance issues for a home office are complicated. You may be covered under your homeowners policy for property you own, such as your desk and filing cabinets, but your employer may be covered for loss to company-owned property, such as a computer or smartphone. If a delivery person slips and falls while making a business-related delivery in this situation, your employer’s policy might cover the injury, your homeowners policy might cover it or you could find yourself in the middle between the two carriers, both of which may initially deny the claim.
If you do work remotely, be sure to check your homeowners policy and ask your employer to confirm the terms and conditions of its policies, or you may find that neither policy covers a loss.
If you have questions about your homeowners policy and your specific home business or work-from-home situation, call E. R. Munro and Company at 1-877-376-8676.
