A potential client comes to your house to take a look at your portfolio. Being the gracious host that you are, you offer a beverage. A martini? Sure. Extra dry? Fine. Have you got olives? Of course you do. Client is thoroughly blown away by your superior mixology skills. Just as you’re about to cross the t’s and dot the i’s, said client trips over your laptop cord.
No big deal, it happened at home and you’ve got that top-notch homeowners insurance just in case of such wildly unlikely incidents, right? Incorrect!
Your homeowners or renters insurance almost certainly does not cover bodily injuries that occur in your home while conducting business. This also includes things like Fido taking a chomp* out of a colleague, or a client slipping on a wet patch on your porch.
That’s why you can’t rely on your homeowners insurance policy for business.
*Fun fact: the average dog bite lawsuit will have you forking over something like $27,000.
Homeowners/Renters insurance does not cover injuries or losses that occur in your home while you’re conducting business.
Your homeowners/renters insurance is 99% guaranteed to leave you out to dry. If you have a loss over $500, that is.
Cue financial ruin.
Ponder these scenarios:
- You’re a marketing consultant. You innocently give the go-ahead for an ad campaign that unknowingly uses imagery that is fantastically offensive to some random, tiny group of people you’ve never heard of. The tiny group of people sues your client, who in turn sues both you and the photographer. Boom. Again, cue financial ruin.
- You’re a glass blower, and you have hundreds of pieces of work in your mom’s shed. Thousands of hours have gone into painstakingly crafting each piece. If time is money, you have a literal fortune stashed in there. A hurricane blows through and the shed ends up on top of the house, smashing your masterpieces. Mom’s homeowners insurance will do exactly nothing to reimburse the time and materials that Hurricane Bonnie destroyed.
Sure, some or all of these situations seem unlikely or silly, but the point is that your homeowners or renters insurance is probably useless in the event of a business-related injury or loss.
Homeowners/renters insurance is great. You just might need more coverage.
To be clear, homeowners/renters insurance is awesome, and you should absolutely have it, but it’s important to know that those policies alone aren’t enough to home-based businesses.
If this is news to you, you’re in good company. A survey conducted for the Independent Insurance Agents & Brokers of America revealed that 40% of folks who work in their homes believed that their businesses were covered by their homeowners/renters insurance. Whelp! False.
Even though you may be a small operation or clients don’t meet you in your home, you still need business insurance. “But I’m a small business,” doesn’t stop legal action. Just because your custom scooter painting business only makes $15,000 per year, it won’t stop someone from suing the living daylights out of you.
Extra coverage doesn’t need to cost a fortune.
The good news: it does not always cost a fortune to insure your at-home business shenanigans. Some homeowners policies offer an endorsement on your homeowners insurance. These can be incredibly cheap (sometimes as little as $50 per year), and can cover some business equipment and certain bodily injury liability (remember the porch slipper?).
However, these additional coverages do not protect you in the event of income loss, or in the event of being sued. So, while business endorsements may be a good place to start, they aren’t generally always a complete solution for a home-based business.
Business insurance is probably a good idea.
There are all kinds of coverage options. For as low as $400, you can get yourself a policy that can offer something like $10,000 of business property coverage, and up to a million dollars of business liability coverage.
Then there are the business owner’s policies, which offer more extensive coverage for folks who have expensive business equipment, or a ton of inventory on hand, or who run a high risk of being sued by peeved clients. These can run between $500 to $2,500 per year, depending on how much coverage you need.
There’s a lot to know about this insurance stuff. We get it. That’s why we’re here to help.
The real point here is that your homeowners/renters insurance is super great, but it’s just not going to cut it. You should definitely stay friends; you just also need to start seeing other insurance policies. No hard feelings.
Don’t need to date around because you already know what you’re looking for? Get an online business insurance quote.Pogo is an online business insurance agency dedicated to helping entrepreneurs and the self-employed get the right insurance, easily.