Changes in technology and the economic downturn mean more of us than ever are working from home. Depending on how you define them, the US now has between 20m and 40m home-based businesses, plus another 30m home offices, many of them used by "telecommuters" – people working from home for another employer. Add those figures together and it means a sizeable chunk of the population now spend at least part of their work-time at home. And the trend is growing.
What many people don’t realize is that this practice has special insurance needs because it likely either won’t be covered by your homeowners policy – for liability for instance – or there'll be restrictions on the level of protection against damage. If you're employed by someone else, the first thing you should do is check with them on how their insurance protects you but if you're self-employed you almost certainly need to arrange additional coverage.
Obviously, if your activity involves visits from clients – a sewing and alterations business for example – there's the risk of personal injury liability, but even if you don’t see another person all day, you still face hazards associated with the sort of job you do and the equipment you use. In many cases, you run the same risks as any business owner for things like product liability – where something you do or make could lead to a lawsuit. Yet half of all home-based business operators are either uninsured or underinsured.
So, what kind of coverage might you need?
- Well, first, you might be able to get an endorsement added to your homeowners insurance to increase protection for damage to your equipment and, in some cases, a degree of liability coverage.
- If your business income exceeds about $5,000 though or you're worried about liability you need a separate home business insurance policy, which can also cover loss of income if your business is interrupted due to damage to your home.
- For maximum protection, you should consider a full Business Owner's Policy, or BOP. This can cover you against business risks when you're away from home and a number of other hazards, as well as having higher payout limits.
If you're in business at home, you definitely should talk to us about protecting your interests. Premiums are not as high as you might expect. And even if you have existing coverage, it may be time to review.