Running a Home-Based Business and the Importance of Being CoveredSeptember 20, 2021
Amid the current pandemic, many have chosen to re-enter the workforce as their own boss, either in the form of a side-hustle or full time. While working from home seems like an ideal situation, there are some considerations one must make when it comes to insurance. If you carry home or renter’s insurance, you are afforded some liability coverage but often not enough. In addition, many personal policies exclude business activities.
Here is how you can run your home-based Niagara business and ensure you are adequately protected.
Home Insurance in Niagara
To fully understand what your home insurance typically does not cover when it comes to your home-based business, you must first understand the coverages usually provided. The two coverages affected mainly by any business you run out of your home are personal property and liability.
Under the personal property coverage on your home insurance, you are covered for any item that you own, usually up to the limit indicated on your policy, with certain exceptions. However, most policies limit the amount of coverage offered for business property to $2,500.
This limitation means that if you run a home-based business in Niagara, for example, and there is a fire, the most you will get for any business-related property is $2,500. This property includes desks, office supplies, filing cabinets, inventory, and any equipment related to the business, among other things.
Most homeowners’ policies go on to exclude computers and related equipment used for a business purpose entirely. This ultimately leaves a significant coverage gap that can only be filled with some type of business insurance.
Another potential coverage gap is regarding the liability portion of the home policy. Liability coverage pays for any damage for which you are legally responsible, up to the limit selected. The standard limit is $100,000 but can be as high as $1,000,000.
Homeowners’ policies typically exclude all liability stemming from business activities. Even if you think your liability exposure is minimal, it is something you still want to consider.
For example, if you are getting a package delivered to your home that involves your business and the delivery person slips and falls, there is a chance that the loss could be denied on your home insurance.
Home Insurance Endorsements
Fortunately, you are not entirely out of luck if you have a home-based business and no business insurance. There are some endorsements you can add to your home insurance to add some additional coverage.
Permitted Incidental Occupancies
If offered by your home insurance, this endorsement is a great way to add some coverage for certain occupations. The permitted incidental occupancies endorsement will provide some additional coverage for business property over the $2,500 limit that is usually provided. Some companies may even allow coverage up to your personal property limit.
However, this endorsement does not apply to every occupation, specifically where the public has routine access to the home. It also does not provide coverage for any business liability or loss of income, so you would need to obtain coverage separately for that.
The permitted incidental occupancies endorsement is a good fit for individuals who run part-time businesses where office work is done primarily out of the home or where inventory is low or minimal. Examples might include piano teachers, tutors, bookkeepers, writers, or tailors.
Home Business Endorsement
A home business endorsement provides more coverage than the permitted incidental occupancies endorsement, but it will not cover every occupation either. To qualify for the home business endorsement, your business must meet specific requirements, such as not exceeding a maximum revenue amount and not selling or distributing any personal care or food items.
The coverage provided under this endorsement opens personal liability for business activities and also provides coverage for business equipment and business income. However, it does not include essential coverages you may need, such as professional liability or general liability. The best occupations for this coverage would be craftsmen, office workers who need personal liability for their business activities, or repairers.
Business Insurance in Niagara
If your side hustle or home-based business is not a fit for the previous endorsements, the other option would be to consider business insurance. The type of business you run would depend on the type of coverage needed. A business owners policy is an option, but here are some examples of the types of business insurance in Niagara:
General Liability Insurance
General liability insurance protects you against bodily injury or property damage that might arise from business activities for which you are legally responsible. This coverage can be helpful if you have clients coming to your home. It can also cover libel and slander, which is particularly important if you produce any digital content.
Professional Liability Insurance
Professional liability insurance protects you from any mistakes or negligence that could occur from your professional services. This coverage is excellent for individuals who frequently give advice, such as consultants, tax advisors, or lawyers.
Cyber Liability Insurance
If most of your work is completed online, there may be a need for cyber liability insurance. Cyber liability will protect you against data breaches and other cyber events that cause damage to your business or clients. These policies can help notify clients of a security breach and pay for data restoration, if applicable.
Business Interruption Insurance
These types of policies will cover any loss of business income that might occur due to an unexpected event. Suppose you cannot conduct your business due to a natural disaster, for example. A business interruption policy will ensure you still have income until you can get back up and running.
If you are running your business from your home, it is essential to ensure you have the proper coverage. Your home or renter’s insurance will not necessarily cover everything you need.
Trust the experts at Duliban Insurance when it comes to your home-based business in Niagara. Contact them today for a review of all your insurance needs!
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