We live in a marvelous time where some of us can roll out of bed, messy hair, horrendous morning breath and start the workday in pajamas. While those who are lucky enough to run their business from home get to avoid office drama and traffic, there is a hidden threat out there that often gets overlooked. No, it’s not the WI-FI going out, although if you work at home that is a pain to deal with and can ruin your day. But also, an excellent excuse to head to the coffee shop.
The precarious situation many entrepreneurs unwittingly put themselves in is going without business insurance because they assume, they are covered under their homeowner’s policy or think they don’t need it. And that misunderstanding could cost a business owner their livelihood.
Running the Show Solo, You Still Need the Right Insurance
Are you scratching your head confused as to why you need coverage if it is just you pounding away at a keyboard or posting your latest eyelash super serum on social media? Don’t worry, we’ll explain.
Okay, so let’s look at Tiffany. Tiffany is a children’s photographer that has a home studio in her extra bedroom. While she shoots on location quite frequently, she also has clients in her home for portrait sessions.
During one of her sessions the mother of the baby she was photographing tripped over the backdrop stand, fell and broke her nose. While homeowner’s policies typically cover slip and fall injuries, this one occurred during business operations, so they could deny the claim. Tiffany could be responsible for covering medical costs & defense costs “out-of-pocket”. That is not a pretty picture.
Another pitfall commonly overlooked in a home-based business is business equipment. If equipment used for business is stored in the home and the home was damaged by a fire, there would be limited coverage for her damaged equipment. In Tiffany’s situation, photography equipment would probably be covered but it would be limited to the internal coverage for business personal property (commonly referred to as BPP) listed in her homeowner’s insurance policy. Coverage limits for business property under a standard homeowners insurance policy can range from $100-$2500. Be sure to check your policy or call your broker to see what limits your policy has.
The good news is that there are options available to small business owners that work from home. Options include endorsing a homeowner’s policy that extend liability and add a bit of business personal property coverage. Or looking at other alternatives such as business owners’ policy (commonly referred to as a BOP). BOP’s can provide the coverage a home-based business-like Tiffany needs and won’t break her budget.
Okay so maybe you don’t have clients in your home regularly. Let’s look at another costly scenario.
Zach is a graphic designer who works from home. He just landed the gig of a lifetime creating a new logo and signage for a private preschool that will have multiple locations. Unfortunately, a few parents thought the signage came out to resemble the unmentionables of the male body and were outraged. So, they started an online campaign against the schools for being lewd and warning other parents to avoid the schools. Although an innocent design flaw, the school decided to sue Zach.
Poor Zach never considered coverage for his business and now he stands to lose his home and all that he has worked hard for. Don’t be like Zach, let us help you find the right coverage for your business. It may be as simple as adding an endorsement to your homeowner’s policy to extend liability, or you may need to secure a separate business policy (BOP).
Business Insurance Protects You and Your Business
First thing is first….no matter what you do- you should separate your business liability from your home, even if you work in your home. The right business policy should protect the products that you sell, the work you produce and client injuries at your home.
A typical business insurance policy will include things like:
Bodily Injury: This coverage kicks in when a customer gets hurt. For instance, Zach had a client over to discuss design specs. However, he didn’t notice that his dog, Lloyd lapped water all over the kitchen, and the client slipped, fell and injured themselves.
Property Damage: This covers the property of others. Let’s say an Avon rep had a prospective customer over and dropped her bottle of fanciful Franny fingernail polish all over her clients new Louis Vuitton and ruined it.
Personal Injury in Advertising: This protects you in a libel and slander cases. This type of coverage could have helped Zach out with his logo design flaw.
These are examples of some of the main coverages you can get with a business insurance policy, or BOP. Even BOP’s have their limitations on coverage and will not provide coverage for things like:
- Business Automobile Coverage
- Professional Liability
- Workers Compensation
Not sure if you need a full-blown business policy? Call 631-782-3175 to speak with one of our knowledgeable insurance professionals. Depending on your business there may be specific endorsements that we can add to your existing policy that may extend the liability on your homeowner’s policy to your business.