It’s the new American dream—working from home. However, home-based businesses face risks, too. They need commercial insurance coverage like any other business, as homeowners or auto insurance won’t cover common home-based business risks.
Here are just a few risks:
Did you hear the one about the delivery person?
Any injury that occurs in the course of business is not covered by homeowners insurance. For example, you can be found liable if delivery people are injured while making business-related deliveries. Or if a customer trips walking up the sidewalk to your home-based computer repair shop and breaks a hip, your homeowners insurance won’t cover injury expenses.
If that customer’s computer breaks into pieces during the fall and is destroyed, you’re responsible for her injuries and for the damaged property. And if a tree crushes the customer’s car parked in your driveway, you’re responsible for those damages, too.
Your homeowners insurance won’t just deny coverage for damage to another’s property relating to your business operations—it also won’t protect your business property, such as computers, printers, and devices, from theft or vandalism.
Furthermore, if that tree falls on your home, causing damage, your insurer will repair your home and most damage to it—but not your business property. This may not mean much for some home businesses, but it could sink those with expensive supplies and equipment.
Remember: Any business primarily run from home is considered home-based. For example, aside from showing properties, real estate agents who primarily work from home are actually running home-based business. If you drive on company business you will need commercial auto insurance. Even if the business makes minimal deliveries, regular auto insurance won’t cover business-related losses. It works like homeowners insurance—if it happened during the course of business or is business-related, it’s not covered.
Denying that you run a home-based business is not the answer. If you cause an accident, injuring other drivers and damaging their cars, your personal auto insurance won’t provide coverage. And some insurers may cancel your policy, because failing to inform them of vehicle-use type is fraudulent.
Similarly, if customers or clients are injured in an accident in your car, they aren’t covered. Without proper coverage, you’ll have to pay judgments or claims.
Auto accident lawsuits are expensive enough, but when people are injured or their property damaged in or by your “business” vehicle, the ensuing lawsuit could be substantial.
If someone else hits you and doesn’t have insurance, or has insurance but not sufficient coverage to pay for damages, you’d face another issue. If you’re driving for business, have standard auto insurance, and are hit, you’d better hope the other person is insured, because you won’t be able to claim under your personal car insurance’s uninsured/underinsured motorists (UM/UIM) coverage.
Everything you own, including your business, could be at risk. But with commercial auto and business insurance, you’ll have the peace of mind you need to get on with business.