Editor’s note: This article was originally published on March 1, 2013 and was updated on August 24, 2015.
If you run any kind of business out of your home, large or small, you may be relying on your home insurance to help you out if stock gets destroyed or a client is injured on a visit to your home. As with everything in insurance, assumptions like these aren’t safe to make and you should speak with your insurance broker to ensure you’re getting the coverage you need to cover your stock and liability. Scott Marit, an Account Executive for Personal Insurance with First Foundation, sorts out what is and isn’t covered under your home insurance and how an extra rider is a must for anyone running a business out of their home.
What Isn't Covered By Your Home Insurance
Whether you have condo, homeowners or tenants insurance, the terms are still the same. If you are conducting business on the property and a client injures themselves while on the property for a business visit, it isn’t covered under your home insurance. The same goes for any products stocked in your home, and equipment used in the everyday running of a home-based business. If you look around your home office at what you use and sell everyday, the dollar signs are already starting to add up to significant costs.
If you are conducting business on the property and a client injures themselves while on the property for a business visit, it isn’t covered under your home insurance.
Additionally, something that is covered by your home insurance is theft of items from your car. This is not usually covered under your car insurance unless you purchase a separate rider for it. This does not apply to laptops, product stock or other items you most commonly use for business that are stolen out of your car.
What Is Covered By Home Insurance
If you can barely count on one finger the times a client has come to your home, and you have minimal stock and equipment to cover, just keeping your home insurance is an option. Ask your insurance broker, but Marit compared two homeowner’s plans and found that one company covered up to $2500 for business-related tools while another covered up to $5000 for the same items.
Home-Based Business Riders Are Affordable
OK then, so you’re thinking, I should probably get one of these riders for home-based business if I’m running any kind of business out of my home. Fine. But can you afford it? If you can afford an extra $200-$300 spread out over the course of the year, you’re fine. That’s how little it costs, it’s also tax-deductible.
Standard Home-Based Business Coverage
If you have any kind of business where you sell product, you’re going to want to get this coverage. It includes up to $25,000 to cover product stock, business equipment, and other items both in your home and when transporting them for business purposes. This will also cover you at trade shows, conferences, farmer’s markets, and anywhere else you sell your products.
You’ll also get the liability extended from your homeowner’s coverage to cover slips and falls, injuries, or other medical issues that a client may sustain during a visit to your in-home business. Hairdressers, barbers and manicurists may purchase additional liability to cover injuries that may be inflicted on customers.
If your gross receipts for your business are over $200,000 per year, you’ll automatically be considered only for commercial insurance. However, there may be other concerns that cause you to move to commercial insurance rather than just taking out a rider. If you do business internationally, even if it is just services performed from the comfort of your home, most insurance companies won’t want to cover you under the home-based business rider. Kathy Anders, First Foundation's in-house commercial lines specialist, has years of experience and would love to discuss your commercial insurance needs with you!
If you have more questions about insuring your home-based business, or have asked your current insurance company about it and are getting expensive quotes, contact Scott at First Foundation to sort out what kind of insurance you need. We’ll worry about it so you can get on with running your business.
If your gross receipts for your business are over $200,000 per year, you’ll automatically be considered only for commercial insurance.