Arising from the Inventiveness of Forced Isolation – Home Businesses

As much of the nation’s workforce spends time at home while the coronavirus continues to wreak havoc on businesses, most analysts acknowledge uncertainty around what the “new normal” will look like after the outbreak subsides. Furloughed employees are reinventing themselves, turning side-gigs or hobbies into their primary source of income. Some small businesses may never return to their brick and mortar locations, as they find themselves adjusted to a whole new way of operating from home.

The types of home-based businesses know no bounds, from hand-made goods, to accounting services, automotive repair, running a day care center, or auctioning items on eBay – the U.S. Small Business Administration (SBA) reports as many as 15 million entrepreneurs across the U.S. are operating from their homes – many without adequate insurance.

As with any business, independent agents should be their home business clients’ first line of defense against financial risk and liability exposure due to underinsurance or no coverage at all. Homeowner’s policies are not likely to cover the full business value or the added liabilities that come with operating a home-based business. As many begin to emerge from the impacts of the pandemic, agents checking in on their accounts – personal and business – can take this opportunity to inquire about any business use of their home. A simple assessment of appropriate coverage may prevent these small business owners from being left underinsured.

Depending on the nature and size of the home-based business, purchasing the right coverage is usually very affordable, with policies generally ranging from $250 to $1,500 per year. Adding more property and liability insurance can be accomplished through the purchase of an In-Home Business Policy or a Businessowners Policy (BOP). Considerations for coverage may include:

  • Business liability, both on and off premises, to protect against claims of bodily injury, property damage, personal and advertising injury to third parties
  • Business personal property insurance to cover the business owner’s property, and a possible business interruption event
  • Additional coverages may include: Business Auto, Workers Compensation, Additional Insured, Garagekeepers, Unmanned Aircraft (Drone), and Cyber Liability

Covering home-based businesses is a valuable way to reduce client risk and can provide the security and confidence to run their business from home. When the small business grows too big for a home office, you may be the first phone call a client makes to secure an appropriate policy for a new commercial space.