• Home-based Businesses Need Commercial Insurance

    Home-based Businesses Need Commercial Insurance August 25, 2016

    While many small business owners operate out of their homes, homeowner’s insurance does not cover all the possible risks. Your homeowner’s policy covers property damage from events like storms, water leaks, and sewer backups to name a few. But if a customer visits your home and is hurt in a fall, that’s a business-related activity that most homeowner’s insurance won’t cover.

    What should a small business owner do to properly cover their business while operating out of their home?

    It is possible to add endorsements—a document that modifies a policy—onto your homeowner’s insurance to allow for business-related activities inside your home. That can be limiting, though. The best option is for small business owners to get commercial insurance. Those terms and conditions are meant to cover business risks and have higher limits.

    What is the best insurance policy for home-based small business owners?

    Brunswick Companies has a policy specifically for home-based businesses like solo accounting practices, those selling hand-crafted items, photographers, wedding planners, real estate or travel agents, and a host of other business classes.

    What other insurance coverage should small business owners consider?

    State laws may require small business owners carry Workers’ Compensation, even if you’re a sole proprietor. In addition to covering any current or future employees, you can rely on your workers’ compensation coverage instead of your major medical insurance if it’s a business-related incident.

    If your business could pose a financial threat to a client, you should also have Professional Liability (also called Errors & Omissions or E&O) coverage. That will protect you should you do something wrong, or be accused of making a mistake.

    What insurance coverage limits should small business owners have?

    Our home-based business insurance policy has general liability coverage of $1,000,000/$2,000,000 and business personal property/loss of income up to $100,000. Professional errors & omissions and equipment breakdown are included at no additional cost for many business classes. New ventures are eligible and can include up to three employees.

    What is the difference between insurable and non-insurable losses?

    Property, the building’s contents, and liability insurance for bodily injury are all insurable under a commercial insurance policy. Examples of things that aren’t covered are products that don’t sell, offices that underperform, or loss of revenue due to employee departure. Those things do happen, but they are considered standard business exposures and not insurable risks.

    What might a home-based small business owner expect to pay annually for coverage?

    Our home-based business insurance begins at a premium of $159 per year. If you have more to protect and add on additional coverages, then the premium will go up. But how much risk you insure comes down to what you can tolerate. You can transfer a lot of risk through insurance coverage, but you pay for what you cover.

    One of the major influencers of coverage for small business owners is revenue. A company making $50,000 a year is very different from one bringing in $5,000 per year. Accurately reporting revenue—or revenue expectations—helps underwriters be on target with the policy’s premium.

    If you would like to know if your home-based small business is in one of our 150 covered business classes so you can secure the proper insurance coverage to protect your income, complete this online application today. Have questions? Call one of our experts at 800-686-8080 today.