What to Know About Home-Based Business Insurance
December 30, 2021Between the rise of remote work, hybrid workplaces, and home-based businesses, there have been, and continue to be, a lot of changes. In addition to other types of home businesses, there are also services that are provided such as childcare, landscaping or snow removal, and more that can fall under the “business” category. When it comes to home-based business insurance, what impact do these changes and trends have related to insurance coverage and protection for those involved in these enterprises?
In some regard, nothing has changed as related to insurance exposure. There are just more incidences of these types of activities, and it highlights the need for more directed attention to the situations. It may be tempting to ignore liability either by not thinking about what could go wrong or by hoping things don’t go wrong. Here are a few examples of home-based business insurance and what could be at risk:
4 Scenarios for Home-Based Businesses
Here are a few common types of home-based businesses along with some scenarios where liability exposures need to be considered:
Scenario #1 – You Sew and Sell Products
Let’s say that you love to sew, and you are good at it. Maybe you start a business selling products you make, and maybe a pandemic came along and you jumped on the opportunity to make colorful masks to meet the growing need.
So, you take orders from friends and family. Then, maybe you advertise on Facebook, start an Etsy shop, launch a website, etc. and take orders online. Soon, you are producing several dozen per week and mailing finished products.
Perhaps you miss removing a pin from one of your masks and the wearer was pricked by the pin and developed an infection on their face. You very well could be held liable for the damages and the medical expense of treatment. Question: Where is your liability protection?
Scenario #2 – You’re Running an In-Home Daycare
Next, let’s look at childcare. You know that daycare is very costly, and you love children so you can make some extra cash by providing an “in-home” option for 3 to 5 children. Great idea, and it can provide a very loving environment for some very fortunate children.
Have you checked with your current insurance carrier to see how they feel about your venture? Will they cover you for liability and what if you would be accused of some type of inappropriate interaction with a child?
These are all questions that need to be addressed before you agree to watch that child. Again, an essential question to ask is – where is your liability protection?
Scenario #3 – You’re Producing a Product
Another example is that of producing some kind of product, whether it be a food item or a beauty or health care product. Examples could be goat milk or sheep milk, cheese, soaps, lotions, wax candles, and the list can go on. In addition to insurance related to producing products, you may also need other insurance for milk products.
If a customer has an allergic reaction to your product, you may have to at least defend yourself in a liability case brought against you. The big question again is – where is your liability protection? Do you need product liability insurance as well?
Scenario #4 – You Do Landscaping or Snow Removal for Others
Landscaping and snow removal are two seasonal examples of home-based businesses that need proper insurance coverage.
Landscaping
First is lawn mowing season. Perhaps you have an energetic entrepreneurial child in your house that starts mowing lawns for the neighbors and it grows into a sizable business for them. There are a few specific things to consider when insuring your landscaping business, and you don’t want to end up without coverage when you need it.
For example, one day, they are mowing a lawn and the mower throws a stone that strikes a vehicle or a person causing damage. The mowing is considered a “commercial business” – where is your liability protection?
Snow Removal
Winter has finally arrived. You finally have purchased that fancy “walk-behind” snowblower or you really splurged and bought a blower to put on the front of your riding mower. The weatherman got it right this time and we really did get those 12 inches of snow with 25 mph winds.
Your snowblower is in hot demand and you have the opportunity to help the neighbors and maybe make some money. You cause damage or injury with your snowblower. You are held liable, and there are differences between snow removal insurance vs landscaping insurance. Again – where is your liability protection? Make sure you are properly insured and covered.
How to Get Home-Based Business Insurance Coverage
When it comes to home-based business insurance and how to get proper coverage, there are several possibilities to address this gap in coverage and reduce or avoid the potential for loss:
1. Endorse Your Existing Homeowners Policy
You may be able to endorse your current homeowner’s policy to expand coverage for business equipment, but this still will not cover inventory. Check with your agent to see what endorsements are available for your specific policy as companies will differ as will your specific situation and needs.
2. Buy an In-Home Business Policy
Purchase an In-home Business or Home-Based Business Insurance policy. Purchasers of in-home policies often operate low-revenue or part-time businesses. These policies can provide both liability coverage and coverage for inventory, both on and off-premises, and can include coverage for theft of money.
3. Get Comprehensive Coverage with a BOP
Another option would be a Business owner’s policy (BOP), which may protect against a higher amount of loss than the first two options with broader coverage.
If you would like to have a continued conversation about your specific enterprise, please call one of our knowledgeable Account Managers at 800-537-6880 or 717-665-2283.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.