If you own a home I’m sure you have a homeowner’s insurance policy.
Now, do you run a home based business?
If so, are you sure that your standard homeowners policy offers you enough, or the right, protection for your business and your assets?
This is especially important to find out if customers or clients visit your home office on a regular, or occasional, basis.
Home-based business insurance coverage and liability
Having a home based business is a dream that many people are opting for — no commute, no boss and the potential for great financial rewards.
However the potential losses associated with a lawsuit that attaches your business assets or income is a nightmare.
It is important to understand that the base coverage provided by your homeowners policy will not adequately protect your assets or potential loss of future income in the event you are sued.
For example, imagine the housekeeper you hired to clean your home falls and is injured badly while performing household duties. Now picture that she doesn’t have any insurance and you end up getting sued for her medical bills. At this point you might realize, all too late, that not only is your home at risk but all your other assets as well – including your business assets and future income for years to come.
So what can offer you additional protection?
An umbrella policy.
For example, Sony Phinitsovanna at Bruen Deldin DiDio Insurance recently wrote about umbrella policy coverage limits and stated that “nearly 85% of payments on umbrella claims are related to auto accidents, and over the past 12 months, 30% of those claims involved a pedestrian, motorcycle or bicycle.”
As you might be able to tell from her example, umbrella policies provide additional insurance coverage beyond the limits established in auto and homeowners policies.
For someone running a home-based business, it’s important for you to know that umbrella policies are written as “following form.” This means that your base homeowner’s policy must cover the business and property as well.
For example, many people think that your coverage may extend to another location where you are doing business – but this is not true. For example – if you frequently participate in trade shows and there is liability associated with your business and interaction with the public, a rider for that limited event will be required.
And it’s important that you disclose you will be doing business in your home when you opt for your base coverage.
Conducting business off your property will not be included in this type of policy. Business umbrella liability insurance only provides extra coverage over what the original base policy covers. If your home business is not covered in the general liability or homeowner’s policy, the umbrella won’t cover it either. However, if you have designed your business insurance program to protect your home business, then business umbrella liability insurance will offer the added protection you just might need.
You would be surprised what can be covered in an umbrella policy. In addition to personal injury, your policy can cover:
- slander, or idle remarks that result in a law suit
- you can extend your auto insurance
- lawsuits resulting from accidents that involve swimming pools and trampolines
- and even litigation involving dog bites.
If your home based business is a dog walking or grooming venture – you will definitely need umbrella coverage.
Recently a tragic incident involving the accidental death of a dog was reported in the news.
A dog walking company was transporting a small puppy home with other dogs when its collar became tangled with another, bigger dog. The dog died and the company was sued for everything they own. No extended coverage was in place because they thought it was a business with relatively few risks.
Just because a business has a minimal start up cost doesn’t mean there should be no coverage.
Hopefully you can see that umbrella coverage is essential for anyone with a home-based business.
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