Wondering if home business insurance is a necessary step beyond regular homeowners insurance? As more and more people find ways to turn their home and property into a business of some sort, this question comes up often. If your home business is something along the lines of blogging on memories of your childhood, your business inventory may consist of a laptop, and you certainly need a roof over your head to do your work.
Or perhaps you sell handmade jewelry online using plant materials preserved in resin. You buy new supplies monthly and don’t store a lot yourself, and you get plant materials far and wide, not only on your own property. You make the jewelry only after it’s been ordered, so there isn’t a lot of inventory of your craft in storage, either. Your business supplies wouldn’t be terribly expensive to replace if there was damage to your home business location. People in this home business category may feel safe with just a regular homeowners insurance policy. (Although there may be a need for liability insurance regarding libel or plagiarism, depending on what’s contained in your blog!).
A good first step for people looking into home business insurance needs is to find out what they already have in order to see if they need to amend it, expand it, or even get additional separate home business insurance. Their current homeowners policy could range from actually restricting any type of business, not restricting but also not covering anything, or covering a very limited amount of business equipment, such as $2500 maximum for a laptop, printer, etc. as one example. Even those that cover some business loss expenses most likely don’t extend to liability for visiting customers or those who consume a product the business produces. If they begin bringing paying customers into their home and/or onto their property, such as to give quilting workshops, teach gardening lessons, or to sell from a pumpkin patch, that’s another consideration that home business insurance may cover if you get the right policy, but isn’t covered without it or if it isn’t specifically written into the policy. Even though non-customer claims – such as the mailman or visiting neighbor – are often covered by homeowners insurance, that coverage isn’t there when they’re paying customers coming onto your property.
Once it’s clear what the current policy already covers and doesn’t cover and they’re sure it isn’t currently enough, people either contact their own agent, or go to a broker, to either amend and upgrade the current policy to add home business coverage, or either amend or make sure the current policy allows for an additional policy, then obtain a separate additional home business insurance policy that matches their needs.
For simply buying home business add-ons to a current homeowners policy, if that’s allowed, (also called adding home business endorsements or sometimes called adding home business riders), there are still limits when doing it this way, but it's still an important step to find out if that might be enough. For example, for an annual extra cost, perhaps around $25 or so, they can bring the home business segment of their coverage up from $2500 to $5000 if there was already standard $2500 coverage available. There may be other endorsements that can be added, depending on your state and the company. A homeowners liability endorsement may be added to help with liability for customers who visit the home up to a certain extent, because once visitors become paying customers, the type of liability insurance in place for the mailman or neighbor stopping by for a visit doesn't cover business customers. And, it may not cover higher numbers of customers coming on to the property that the business owner is hoping for.
For some, though, it appears adding a separate home business insurance is the next step if their business starts expanding into having higher cost inventory and more equipment that needs protecting. A greenhouse, for example. And just as important if not more so, also for liability when customers, especially in larger numbers, start coming to the property or are consuming the goods from that home business. A separate home business insurance policy can cover both, or act as two different add-ons. It can be frustrating when, in general, your home is usually your private home for most of the year, but you’re just now testing the grounds with a home business of giving a chef’s herb garden tour over a single weekend or you want to remain very part time with a u-pick flower patch for only three weeks of the year. But when you find a good company or a good broker, you shouldn’t have to pay what a luxury year-round resort business pays if you merely want to try out a home business that allows customers to pay for painting classes held in your barn during a few weeks in summer.
Many in this situation said they just kept shopping and/or some used a good broker who works with many different business insurance companies until they were satisfied. If you've already been trying to find home business insurance and are frustrated, you're not alone. One person was told by one company she couldn't get the insurance she wanted until she'd been in business for four years. Hm. Operating with no insurance for four years. Another was quoted an exorbitant amount and almost gave up on her project altogether, until she received another quote elsewhere for less than half the original quote. Yet others have found home business insurance costs to be too high until they slightly tweaked what they originally planned to do, such as trading inviting huge numbers of the general public as cooking class customers onto their property for offering higher paying workshops for a smaller number of professional chefs through a nearby chef school, who could more easily sign specific types of waivers or contribute customer insurance riders of their own (see a link to our article below). The chefs paid more for each class, and the home business insurance cost less with the waivers/riders and with less customers onsite.
Eventually, your own policy should cover everything you need covered, but you shouldn’t pay for more than what you need. They should be customized to you and reflect what you’re doing, including times of year the business is open to customers, amount of customers expected, area of the property customers are allowed, etc. For those whom it applies, another type of home business policy when operating more than just a private home but less than a full time large ag business is a hobby farm policy some states and companies might offer. In addition to this, a special agritourism rider described in our article linked below may apply to your situation.
We’re not insurance agents or brokers, nor giving financial or legal advice, but we hope the discussion of what others have discovered regarding whether to get a home business insurance policy gives you ideas to take to your own chosen advisor.
To help cut costs in home business insurance and encourage your insurance company to cover you fairly, and to help keep you and your customers safe regardless, there are additional considerations that vary from state to state including waivers, placing signs in specific ways, etc. that we go over LINK AVAILABLE SOON.