Learn about interior designer insurance coverage. If you work out of home or from office or studio, there are many risks that can harm your business including damage to other people's property & slip and falls at your studio.
Interior Designer Insurance Coverage
Interior decorators and designers work with residential or commercial clients to plan the design of an interior space, room, group of rooms, or an entire building. The design may focus on aesthetics, functionality or both. It may be purely decorative or include practical elements such as ergonomics. The interior decorator may determine the color, style, and location of furnishings, floor coverings, lighting, walls, wallpaper, window treatments and woodwork.
Some assist clients with selecting paintings or other decorative artwork. Interior decorators may arrange the purchase of furnishings, materials, and accessories needed to complete the project. Some may have significant values in storage in commercial or industrial buildings, while others function as sales representatives for suppliers. Interior decorators often need to know about construction techniques and be able to work with engineers and architects to meet local, state, and federal codes and regulations, such as those needed to properly locate stairways and exits.
If you have an interior design business, one of the things that you might want to think about is commercial insurance. Even though most people do not think about an interior design business having inherent risks, the truth is that there are risks with any type of business. Let's explore some of the interior designer insurance coverage out there for decorators - and why you might need them.
Interior Designer's Risks & Exposures
There are definitely risks that come with having an interior design business. Interior decorators face most of the normal risk than other business owners have, but they have some unique challenges as well. Interior designer insurance coverage can help protect you. Injuries that happen to customers that visit your office is one of those risks, as is damage or devaluation for someone else's property that you helped design.
Premises liability exposures are generally limited at the interior decorator's office due to lack of public access. If there is a showroom or retail sales, customers may slip and fall over displays. If the decorator acts as a general contractor and hires subcontractors on behalf of the client, the liability exposure increases. Poorly written contracts can result in liability hazards not anticipated for this classification.
Workers compensation exposure is generally limited to an office. Workstations should be ergonomically designed to prevent repetitive motion injuries such as carpal tunnel syndrome. If there is delivery of goods or installation of furnishings or wallcoverings, workers can incur hernias, sprains and strains from lifting, be injured in automobile accidents, by falling objects, cuts, falls, and awkward positions. If the interior decorator hires subcontractors, the workers compensation exposure increases unless all subcontractors carry their own insurance.
Property exposures may be limited to an office, but some will have storage or sales of furniture, home furnishings, and wallpaper. Electrical wiring should meet current codes for the occupancy. Fire can occur from overheating or malfunctioning of equipment. Property in storage facilities can be damaged by fire, smoke and water. Flammables kept on site should be properly labeled, separated and stored. Storage facilities can be targeted by thieves. Appropriate security controls should be taken including an alarm system that reports directly to a central station or the police department.
Crime exposures are from employee dishonesty. Background checks, including criminal history, should be performed on all employees handling money. All ordering, billing and disbursement should be handled as separate duties with reconciliations occurring regularly. Physical inventories and annual audits should be conducted.
Inland marine exposures may include accounts receivables if the interior decorator offers credit to clients, audio and visual equipment used for presentations, computers for office use, contractors' equipment and tools, fine arts, goods offsite, in transit or at exhibitions, salespersons' samples, and valuable papers and records for clients' and suppliers' information. There may be a bailees' exposure if the interior decorator purchases items on behalf of a client and stores or transports goods until delivered and installed.
Clear documentation of ownership is important. There may occasionally be an installation exposure. Decorative items and furnishings may be expensive and targets for theft. They may be highly susceptible to breakage, marring or scratching, smoke, temperature change, or water damage. Appropriate security controls should be taken including an alarm system that reports directly to a central station or the police department. Professional packers may be used to reduce the potential for breakage and theft losses while the items are in transit.
Commercial auto exposure is generally limited to driving to and from clients' premises. If the interior decorator delivers goods, the exposure increases. MVRs for drivers must be run on a regular basis. Random drug and alcohol testing should be conducted. Vehicles must be well maintained with records kept in a central location.
Types Of Interior Designer Business Insurance
There are few types of interior designer insurance coverage that your design/decorating should have at the minimum:
Business Owner's Policy (BOP)
One of the options that you have when it comes to interior designer insurance coverage is a business owner's policy. A BOP is sort of like a comprehensive insurance bundle to cover your entire business. A business owner's policy is often discounted because many important coverages are included, and it provides several different types of essential insurance.
There are only certain businesses out there that are eligible for a business owner's policy based on factors like the business location, revenues, the financial stability of the business, security features and more. Here are some specific types of insurance that often included with the business owner's policy:
Liability Insurance - Liability insurance is basically insurance against all the things that could happen where you would be held liable. For example, if someone comes into your office and falls on a wet floor, liability insurance will protect you. As an interior designer, you are often responsible for people's homes or businesses and how they look. Liability insurance also protects you against this in many cases.
Property Insurance - Property insurance is basically insurance that protects your property against unforeseen hazards and disasters. For example, if an electrical fire burns down your location, you may be eligible for a property insurance claim. Property insurance protects you against vandalism, natural disasters, theft and various other mishaps that can happen when you own a business.
Business Interruption Insurance - If your business stops making money, then you definitely want to be covered by business interruption insurance. This protects your revenue in case your business ever temporarily stops making money due to a covered loss.
Professional Liability Insurance
Also known as errors and omissions insurance, professional liability insurance for interior designers can provide the financial security and peace of mind that you want. Professional liability insurance is a specific type of coverage that protects your business from failures, mistakes or oversights in the design or decorating services that you provide. There are many circumstances when an interior designer can be sued for negligence including:
- Failing to complete a project on time.
- Failing to complete a project within budget.
- Giving bad or wrong advice.
- Mistakes in scheduling, ordering or measuring.
- Using the wrong materials.
Errors and omissions insurance for interior designers covers costs associated with legal defenses if you get sued, even if there are no grounds for the suit, as well as judgments and settlements.
Insurance Classification Of Interior Designers
Insurers classify interior decorating businesses using several coding systems. You can wind up paying more for your insurance if your design business is not properly classified. Below are the three most commonly used coding systems for interior decorating & design insurance:
- ISO General Liability Codes: 49840, 96611
- NAICS CODE: 541410 Interior Design Services
- SIC CODE: 7389 Business Services, NEC
- Suggested Workers Compensation Codes: 8742, 9521
SIC Code 7389 - Business Services, NEC
Here is the official OSHA SIC code description for interior design and decorating:
Establishments primarily engaged in furnishing business services, not elsewhere classified...
- Interior decorating consulting service, except painters and paper
- Interior designing service, except painters and paper hangers
Interior Designer Insurance Coverage - The Bottom Line
We hope this article on interior designer insurance coverage has been informative. Talk to your broker and find out exactly what they offer. There are a lot of commercial insurance options for decorators and designers. There are a few other types of insurance that you should be aware of as a decorator:
Minimum recommended coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Umbrella Liability, Automobile Liability and Physical Damage, Hired and Non-owned Auto and Workers Compensation.
Other coverages to consider: Building, Business Income with Extra Expense, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Bailees' Customers Floater, Contractors' Equipment and Tools, Exhibition Floater, Fine Arts, Goods in Transit, Installation Floater, Salespersons' Samples, Cyber Liability, Employment-related Practices and Stop Gap Liability.