Do you need business insurance if you work from home? Does your homeowners insurance cover your personal business needs? The world of business is changing, and it’s moving more and more into the home. From solo-preneurs to online businesses to telecommuters, there are millions of individuals working out of their home part- or full-time.
How do you protect yourself, both personally and professionally, when operating out of your house? In this Home Office Insurance Guide, we’ll answer some of your questions about the types of insurance you need to protect yourself when working from home.
Home Office Insurance Guide
Does homeowners insurance cover business?
Homeowners insurance usually does not cover business-related perils or claims, even if it occurs in the home. You will usually need separate business insurance for any liability or property that is related to your business.
For example, a client comes on your property, and they slip and injure themselves. Your homeowners insurance likely will not cover that liability claim because it was “a cause” of your business. Learn more about homeowners liability insurance here.
Some homeowners policies may offer a small limit for your business property, if it is used for both personal and professional use. For example, freelancers who use a laptop for work (and for watching Netflix) may be able to have their laptop covered under their standard homeowners policy.
However, business-related liability is almost never covered under homeowners’ insurance.
Consult with your insurance agent to see if any part of your small business is covered under your homeowners insurance. You can also learn more here: 5 Reasons Small Businesses Need Business Insurance.
Will my employer cover my insurance?
If you are a telecommuter who works from home at least some of the time, your organization may have insurance in place that will cover you. For example, if you bring your business computer home, your organization’s insurance would likely cover the cost of that laptop if it was stolen or damaged from a covered peril—even in your home.
Talk to human resources at your company to get the details about how their business insurance covers you. Figure out where you might be deficient in coverage, so you can look into purchasing your own business insurance, especially if you have clients coming to your house or you are producing products within your home.
What types of business insurance do I need for my home office?
Business General Liability Insurance
Your homeowners insurance will often deny liability claims if it was a business-related incident. For example, you invite a client to your home and they break their arm on your stairs. Because the client was there for business purposes, your homeowners insurance might not pay for their medical bills and related costs.
Since your homeowners policy usually won’t cover business-related liabilities, you’ll want to purchase business general liability insurance (also called commercial liability insurance). This helps cover any liability cases that are related to your business, both within and outside the home. This could be if someone hurts themselves while visiting your home on business, but it can also be other liability concerns like property damage liability or personal injury (libel, slander).
Incidental Home Business Endorsement
In some cases, you can get a home business endorsement on your homeowners or renter’s insurance policy. This will provide a line of business-related liability coverage, like minor injuries that occur on your property. However, the limits for this kind of endorsement are usually significantly lower than general liability insurance. We typically only recommend this if your work is low-risk, like if you rarely have clients on-property and/or your work doesn’t risk causing any physical or mental injury.
Business Property Insurance
Business property insurance helps protect the property that your business owns. This could be anything from a work laptop to a massage table to products that you sell and beyond.
If you work from home, business property insurance works most closely with your homeowners contents coverage. Let’s say you own a laptop through your business and you want it covered through your business insurance, along with your other business property. You should not make a claim for it on your homeowners contents coverage but instead on your business property insurance.
However, if the only “property” you use for your freelance business is your laptop, then you might want to keep it on your homeowners contents coverage instead of purchasing separate business property insurance. Many standard homeowners policies will include a sub-limit for business-related property, like a computer or printer. Check with your insurance agent to see which possessions are covered and at which coverage limits.
Commercial Auto Insurance
If you use a personal or business vehicle for work, you may want to purchase separate commercial auto insurance. This will cover your vehicle while it’s being used for work purposes. For example, you’re driving to a client’s house and you get into an accident. Since you were “on the clock,” any liability and damage could fall under your business insurance.
Your carrier may allow commercial auto insurance to be added as a supplemental policy on your standard auto insurance or on your business insurance directly.
We’ve listed the primary business insurance types that will help protect you if you work from home. But there are other types of business insurance you might want to look into, especially if you’re a solo-preneur or small business owner:
- Business income insurance helps cover lost income if your business suffers a loss that makes it impossible to do business for a period of time.
- Errors and omissions insurance helps provide professional liability insurance in the case you give damaging advice or provide a faulty product/service.
- Workers’ compensation insurance covers any employees you have in case they are injured while working.
- Get more information about home office insurance here.
You usually want to separate your professional and personal liabilities—especially if you work from home. Whether you own your own business or are an employee of a central organization, working from a home office has its own set of risks and challenges. You especially want to ensure you’re protected against lawsuits (liability), injuries, and business property damage.
Review your coverage and discuss your business insurance options with an expert insurance advisor today at (844) 824-2889!
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