By Catherine Powell
Homeowner’s and auto
insurance are terrific ways to cover your personal assets from such things as
fire, theft and acts of God. However, if
you use either your home or your personal vehicle for business purposes, you
had better be aware that there are built-in exclusions that could leave you holding
the bag should you need to file a claim. For those of you who run a small business out
of your home or moonlight as an Uber or Lyft driver, this blog will show you what
you need to do to keep your business from putting you in the poor house.
Image courtesy Pixabay
- Is your home office equipment covered under your homeowner’s insurance? – If COVID-19 made you work at home as opposed to the office, or if you decided to supplement your income during the past year by starting a home-based business, your current homeowner’s coverage has a few gaps. For instance, many standard policies have a low limit for business property kept in the home. That means if your home office now bristles with computers, inkjet printers, digital cameras, big-screen monitors, and other expensive office equipment, you’d best check your policy to see how much of it is covered in case of fire or theft. Typical homeowner’s policies only provide up to $2,500 coverage.
- Do you see clients in your home or rely on delivery drivers to pick up your orders there? – Should either a customer or a delivery driver slip and fall while on your property, you could wind up finding out that your homeowner’s policy specifically excludes coverage for “business-related” injuries. In other words, your homeowner’s policy provides little to no liability protection for your small home business.
- How valuable is your data? – If you take orders over the phone, the data contained on your computer can be hacked. If a hacker were to gain access to credit card numbers or other sensitive data that belongs to your customers, you could be sued. If that were to occur, your homeowner’s policy would provide zero coverage to help your home-based business deal with the loss and potential liability of a data breach.
- What would happen if your business was shut down for several months? – Everything from hurricanes to contagion like COVID-19 can shut down a business for months on end. If your home business was put out of business for several months, how would you replace the lost income needed to sustain yourself until the crisis was over?
- Why don’t all home-based business owners have their enterprises covered? – Recent studies of small office home office (SOHO) business owners indicated that 87% of them didn’t realize they needed business insurance. 29% thought their business was too small to need insurance. 39% assumed their businesses were covered under their homeowner’s policy. 19% could offer no reason why they didn’t have their enterprise covered other than they thought small business insurance was too expensive or they weren’t worried about any potential loss.
- Do you transport goods in your vehicle? – If you routinely take orders to the post office or drop off goods to local customers, have you considered what would happen were the goods to be stolen or destroyed or were you to wind up in an auto accident? How about if your car was totaled due to a flash flood? Unfortunately, neither your homeowner’s nor your auto insurance will pay you one red cent for the loss of goods being delivered to customers or being transported in your personal vehicle.
- Do you use your vehicle for business purposes? – If you participate in a ridesharing program, if you get paid to make deliveries for other businesses, or if you use your personal vehicle for any other commercial purpose your insurance company can deny claims made for accidents or thefts. That’s because personal auto policies weren’t designed to cover commercial use of a vehicle. Even if the company that pays you to drive people around town or drop off food or goods provides additional coverage for your vehicle, there can be gaps that could later come to haunt you. Before you participate in any business that requires you to use your vehicle, you need to talk to your insurance agent. There are specific insurance products that have been developed to help cover people who moonlight as taxi and delivery drivers.
- Maybe all you need is an endorsement on your homeowner’s policy. – Depending on the type and volume of business you do from home, you may be able to get all the coverage you need via a homeowner’s policy endorsement. This will increase your business-property losses to $5,000 and your off-premises losses to $1,000. However, this kind of endorsement doesn’t typically include liability or data-loss protection. Nor does it cover you for loss of income due to a business interruption.
- Have you asked your agent about an in-home business policy? – This kind of policy not only covers you but up to three employees, provided your business grosses less than $250,000. While coverage varies from insurer to insurer, this kind of policy typically includes up to $10,000 in office equipment losses, liability coverage for business related injuries, data breaches, and losses due to business interruptions. These types of policies are either all-inclusive where all four kinds of protection are written under one policy, or the data breach segment may be issued as a separate policy. (If you handle sensitive data, ask your agent about this feature.)
- Does your home-based venture gross more than $250,000 annually? – Then you may qualify for what’s known as a Business Owner’s Policy or BOP. Like the in-home business policy a BOP is designed to include several kinds of coverage under one policy. The limits are generally higher and the limitations of a BOP are usually less than those of an in-home business policy. Many BOPs even include liability coverage that protects you from harm done to customers through defective products, faulty installation and/or damage to your home office that forces you to relocate your business temporarily. To best assess your coverage needs for this or any other business-related insurance products, call your agent.
Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida. To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com/