With technology expanding every day, more and more people are building home businesses. However, a homeowners policy will not cover the risks of these businesses in most cases.
The only hope homeowners have of receiving any compensation is if their policies have special endorsements. For example, a homeowner who has a policy to cover a home daycare facility would be covered when filing a claim for that type of business. Also, some policies have very limited coverage for items such as computers or other business property. For these reasons, it is important to have business coverage instead of making the mistake of believing homeowners insurance will suffice.
Since few people set foot on their premises, many home business owners may not think they need coverage. Liability claims typically do not happen on the premises with home businesses, so this creates a problem. For example, a person may misinterpret a message and take action based on an Internet site’s information. If that person is injured because of it, he or she could file a claim. Another common problem with Internet businesses is when customers are injured by products the business sells.
Business insurance policies typically include coverage for personal injuries, so a person taking legal action for slander or libel would fall under this category. Both customers and competitors can sue a business. An off-premises injury would be covered. It would also cover property that causes injuries in the line of work. For example, a person running a cleaning business who takes a vacuum to a home where a resident trips over the cord would be covered if that person files an injury claim. It also covers trade shows and typically meets the standards some of those events require.
When it comes to property, anything a homeowner has is usually excluded. Many people spend a considerable amount of money on a computer and accessories to make the business run more efficiently. If anything were to happen to these items and they were not covered, it would be a considerable loss for most new business owners who had to replace them. Business coverage will also protect inventory. For example, a person who runs a home cosmetics business who has to keep a decent stock of items around would be devastated if there were a fire and all of those cosmetics were not covered. Damage of others’ property, insurance for valuable papers and several other bonuses are included with business insurance.
Business coverage is designed to protect both property and interests, which is why it is so comprehensive. People who are providing advice or non-tangible services and products will also need a professional liability insurance policy. This will cover claims based on accusations of bad advice. Another common term for this insurance is errors and omissions coverage. If there are employees, business owners are also required to obtain workers’ compensation coverage. There may also be other insurance needs based on the size and type of business being run. Simply hoping that a homeowners policy will cover a person if a claim is filed will result in frustration if the business sustains a loss. Businesses have higher risk rates than homeowners, so always count on claims being denied if they are related to business but filed against a homeowners policy.
To learn more about business insurance and what options are best for individual needs, discuss concerns with an agent or call the RogersGray Small Business Department at 800-553-1801 or email SB@rogersgray.com.