I try not to preach about things.  I don’t like being preached at (about anything, or by anyone, ask my wife). So I try hard to not preach at other people.

Its OK to Make Money From Home, Now Protect It

However, Home-Based Business is a topic I will stand on a soap box for.  Because the liability (and property) repercussions of NOT properly insuring a Home-based Business can be devastating.

In this article from INC. Magazine titled Recession Feeds Increase of Home-based Businesses the very first line tells the story “More than half of all businesses in the United States are now home based.”  This next stat is mine and has no factual backing but I’d be willing to bet 80 percent of those Home-based Businesses are not properly insured.

(As a side note I don’t usually like to use made-up stats and truthfully I would love to do a poll on this stat because I really do feel it would be true and its discovery would help drive these Hometrepreneurs to purchase the proper coverage they need.  Unfortunately, I need to sell insurance policies to keep food on my family’s table so I will not be able to do the research.  But if you have the means please take the ball and run with it then let me know what you find out…)

Why Am I Exposed With a Home-based Business?

The truth is, if you are running a business out of your home and there is a claim resulting from anything having to do with that business there is a HIGH likelihood your claim is going to be denied.  Your Homeowners policy is NOT intended to cover business exposures.

Home-based Business Misconceptions

(Please see this article by IIABA for more details on Myths of Home-based Business. I have outlined the ones I feel are most crucial)

1. “This is not a business its just a hobby.  I don’t make much money.”
   • For most homeowners policies if you make more than $2,000 a year you’re running a business and the claim will most likely be denied.
2. “I have a Incidental Business Endorsement on my homeowners policy. I’m all set”
   • The Incidental Business Endorsement to a homeowners policy is used for exactly what it says “incidental business.”  The lawyer that occasionally brings his work home. An accountant that will do some tax-returns from home.  NOT the guy doing woodwork in his garage creating dressers as a side job.  NOT the Mary Kay saleswoman who is having home parties twice a month.  These are not incidental exposures and there will be gaps and limits to the coverage provided in the event of a loss.
   • Additionally, this endorsement does not cover anything (liability or property) Off-Premises.  So if you are delivering that hand-crafted dresser you just built for your neighbor down the street and get into a car accident that ruins the dresser… You’re getting Bupkis… Nada…
3. “I never have anyone in my house for business purposes so I don’t need liability.”
   • Do you ever have materials for your Home-based Business delivered?  If that delivery person slips and falls you are most likely SOL… Do you ever go Off-Premises for a trade show, delivery, conference, seminar, client call, etc? You guessed it, you don’t have Off-Premises liability.

OK, My Homeowners Doesn’t Cover Home-based Business, Now What?

You need a Home-based Business Insurance Policy.  Now before you get all fired up that an Insurance Salesman is trying to sell you another insurance policy realize that most Home-based Business Insurance policies run between $150 and $350 a year.  That is NOT a lot of money for coverage they provide considering you get Liability, Loss of Income and Business Property… I think the sustainability of your business is worth that kind of investment.  Do you?

Disclaimer:

This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions take or not taken by the readers based upon such information.

Thank you,

Ryan H.

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