Does Running a Business From Home Affect Your Home Insurance?

According to the U.S. Small Business Administration, there are 31.7million small businesses in the US.

Moreover, a quarter of employer firms(24%) were home-based, indicating that many businesses trace their roots to a home-based model before venturing out.

Most households in California procure homeowners insurance to protect their property or chattels under their roof.

However, your risk profile becomes different with a home business in place.

Remember, running a business involves inventory, additional equipment, employees, and hosting clients, which brings extra risk.

Here’s why it’s wise to consider an alternative like business insurance for a home-based enterprise.

Homeowners Insurance Doesn’t Cover Home-based Businesses

Home insurance is designed to cover everything under your roof. Even so, it excludes business equipment and inventory.

Depending on the size of your business, some insurers may include a few business tools, books, and equipment.

As your business grows, additional equipment and new electric connections may increase the fire risk.

In addition, high-value equipment falls into different classifications not covered by home insurance.

Ultimately, a home-based business introduces additional assets and risks, elements that disqualify it from home insurance.

Disclose Your Home-based Business to the Insurer

The additional risk posed by a home-based business is the potential for an insurer to decline your claim.

Remember, utmost good faith is a crucial principle of insurance.

Under these circumstances, the failure to disclose a home-based business affects your claim.

Fortunately, upon disclosure, the insurer can assess the additional risk and recommend suitable business insurance. 

Insurance Alternatives For Home-based Businesses

It’s advisable to purchase a separate cover for personal assets and a complimentary cover for the home business.

Adopting this approach protects you against all risks and fulfills the obligation of full disclosure.

Here are a few suitable plans for your home.

Business Insurance

A home-based entrepreneur can use business insurance to enhance their protection against risks and losses.

Below are the benefits of business insurance:

• Protection Against Property Damage: Business insurance pays the replacement and repair costs of the damaged business assets.

• Minimize Financial Loss: If your business suffers an interruption due to a natural disaster, the business insurance can reimburse your lost income.

• It can also cover advertising liability.

Professional Liability

A home-based business operates in an open environment like other firms. Therefore, it’s equally exposed to risks of legal suits.

As such, consider purchasing professional liability insurance to shield your business against liability arising from errors and omissions in the line of duty.

Contractors Insurance

Contractors’ liability insurance covers your small business in the event of unforeseen risks.

It protects work tools, equipment, employees, and business operations.

It’s suitable for electricians, plumbers, painters, HVAC contractors, or security contractors who run their businesses at home.

Let Us Protect Your Home-based Business

If you run a home-based business, its operations expose your assets to additional risk elements.

As such, you need an exclusive insurance plan to protect your assets and business.

At Panorama Insurance Agency Northridge, CA. We have an array of business insurance products for your choice.

Contact us online or call us at 818.797.9896 to learn more.