If you work for yourself, then we’re willing to bet that you do most of your work from your home office. But have you thought of what would happen if someone broke into your office and stole or damaged most of your equipment, or a client got injured on your property and decided to claim damages against you for the event?
Demystifying home office insurance. Simple home insurance isn’t enough to cover events like this – and you can easily run into costs that chew into savings your business doesn’t have. Here’s more information on why you need Home Office Insurance to protect yourself against the risks associated with running your business from your home.
Home Insurance: It’s Not Enough
Most people who work from home will have had the foresight to get their homes and its contents insured. What many people don’t know is that home insurance only covers your home and the contents under certain conditions – and running a business from home is considered to be entirely separate. Yes, that means that your home insurance typically does not cover anything happening to your business – and if it does, your coverage will be limited. If home insurance is all you have, then you are severely underinsured.
What Home Insurance Doesn’t Cover
Home insurance will not cover losses to your businesses’ funds, property or personal data either. In addition to this, most home insurance policies have an exclusion section that pertains to any Liability Damage: This includes any injuries that customers or clients might sustain while they are on your property.
Defining a Business
To ensure that you have the right coverage for your home business, let’s define just what constitutes a business first. There are variations on how the law defines business, but usually it counts if… “You are doing anything, part or full-time, from or with the premises for financial gain.”
This includes employing others and professional trades such as farming from a property, too. Sometimes, there’s an exemption for charity work that’s done from home – it’s usually not for profit – though check your specific insurance policy if you want to be sure about the details.
Insuring Your Business: The Business Owners’ Policy
Demystifying home office insurance. There are several ways to insure your home business – but, as we’ve already discussed, not through your regular home insurance. If you’re looking at insuring your home business, then you are likely looking at what’s called a Business Owners’ Policy (or BOP). To be more specific, this policy is designed to insure small businesses. This type of policy will naturally include Liability Insurance as part of it, so it’s ideal if you run a business that consults clients at your home – or you get a constant run-through of customers.
Insuring Your Business: Homeowners Endorsements
Another way to insure your business sis through Homeowners or Businessowners Endorsements: This is a clause in your homeowner insurance policy that will come into effect should your business meet certain requirements Check with each insurer to make sure what their requirements are before you sign up to anything at all.
Insuring Your Business: Other Insurance Policies
If you need your business covered and you can’t find any of the above policies that do the job, then you can also consider separate business policies that manage to cover your needs. If you’re focusing on insuring your property, then you could purchase a commercial property policy to cover your risks. If you’re after covering your risks instead, then you can supplement your regular insurance policy with Liability Insurance – which will sort you out if anyone were to claim damages.
There are many factors that can increase the risk of your insurance: This includes asking yourself questions like:
- Does the property have a security system?
- Have all the items that need to be insured been listed on the policy?
- Do you know who your employees are and have a written record of everyone who has entered the property?
- Is your data stored safely?
Ethan’s Last Word
The moral of the story is to get small business insurance if you have a home office!