It’s an amazing statistic. And it’s “proof positive” of how the American economy has radically transformed. According to the Small Business Administration, more than 50 percent of the businesses in the U.S. now are based out of the owner’s home. These businesses can be anything from Uber to Airbnb to a host of other new and older professions making up the new “Gig Economy.”
Do you work from home—or would you like it to? Then there are very important things you must know regarding your homeowner’s insurance policy. You may think your policy covers various business situations should the unexpected happen, but most homeowner’s policies actually don’t. In fact, most of them exclude coverage for home-based businesses.
Do You Need Extra Coverage?
If you have a home-based business, here’s what you need to do. First, read your homeowner’s insurance policy to determine what’s covered and what isn’t. In most instances, you will need to supplement your homeowner’s policy if you:
- Have business equipment on your property;
- Are at-risk for work-related accidents/incidents in your home;
- Have business contacts, contractors, or employees who visit your home-based business;
- Keep business data at home.
Getting the Protection You Need
As a home-based business owner, you typically have 2 business-insurance options to consider. Which option you choose depends on such factors as the size and type of your business, how often business-related visitors are in your home, and your exposure to liability. Your 2 options are:
- Rider(s) to your homeowner’s insurance policy . . . This option is generally low-cost and can provide the limited additional coverage you need. You can work with your insurance carrier to make sure it provides, for example, protection for a small amount of business equipment, and liability coverage if a business-related third-party (such as a delivery person), is injured in your home.
- A “BOP” (Business Owner’s Policy) . . . This insurance option offers the most comprehensive coverage for home-based businesses. It will protect you and your wallet against out-of-the-blue business interruptions, damage to business data or equipment, and professional liability claims.
A Special Word about AIRBNB
The radical transformation of the American and global economies have witnessed the explosive rise of new “Gig Economy” opportunities such as Airbnb, Uber, and various situations in which contractors might work at your home. Each of these new business opportunities creates specific insurance-related situations you must be aware of.
Airbnb’s Host Protection Insurance offers the general insurance and liability coverage Airbnb hosts need. But it’s important to understand exactly how this policy “interacts” with your homeowner’s policy. We strongly suggest you contact A2Z about this, as it’s always a good idea to let your insurance carrier know about rental activity in your property.
You also must be aware of the insurance situation regarding contractors who work at your home. Make sure any contractor you hire carries both commercial general liability and, where applicable, Workers’ Compensation insurance. Ask for this insurance documentation before you sign a contract. This generally will cover you adequately, especially if you (as we recommend) have riders to your homeowner’s policy or a BOP that covers you in the case of third-party injuries in your home.
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