Homeowners insurance companies are finding that the number of home-based businesses operating in America has grown exponentially in the past year and a half, largely because of the COVID-19 pandemic.
Moving work to home has been a great solution for many, whether running a small business from home or doing work for an employer at home; however, it has also brought up some important business insurance questions.
Do you need business owner policy insurance when working from home?
Work-From-Home Versus A Home-Based Business
The first differentiation to make when questioning whether a homeowners insurance policy can cover work activities in the home or if you need a separate business insurance policy is who is your employer.
If the work being done is simply your regular job being performed at home, whether in a home office or at the kitchen table, this is considerably different than working for your own home-based business.
Those running a business at home usually require separate BOP coverage, regardless of what service the business offers.
Homeowners Insurance Versus Business Insurance
In the examples mentioned above, business dealings including any liability exposures are still covered under your employer’s business insurance if you are an employee.
Your home policy may possibly cover some property damage and related losses depending on how the loss occurs, but that is all it covers.
A standard homeowners insurance policy will not cover losses and liabilities relating to a home business because it is a business and should be covered by its own policy.
Due to the nature of doing business itself, generating income, and the different rules and liabilities that businesses face, the right insurance is imperative, even for a small home-based business.
What Does Home-Based Business Insurance Cover?
For those starting new home businesses or moving existing small businesses to their homes, BOP insurance will cover the following losses that a homeowners policy generally will not:
- General Liability Coverage - Liability for the service or product being produced by the business, business clients in your home office or on your property, and others.
- Business Property Coverage - Equipment, inventory, supplies, and more things owned and used by the business.
- E&O Coverage - Covers businesses that provide services against errors and omissions in the service provided.
- Employee Coverage - Workers' compensation insurance for hiring employees other than family members.
Keep A Home-Based Business Properly Protected
Although the COVID-19 pandemic has caused hardships for many companies, it has brought about a boom of creativity and adaptability at the same time in the form of new home-based businesses.
If you started a business in the past 2 years, be sure to talk to a business insurance provider about the insurance policy that is needed.
Check with your homeowner's insurance provider for their definition of what constitutes a home office, working from home, or running a business to be sure that whatever your venture may be, it is properly protected.
Fortunately, BOP insurance for small businesses is a relatively inexpensive necessity that will help your company succeed years into the future!
