There are many benefits to operating a home-based business. The first, of course, is the instant commute. Many who have a home-based business conduct much of their morning office duties from their jammies. There is also the ability to better set your own schedule and be able to react to family duties. Many who operate home-based businesses are their own bosses, which has its perks. Perhaps the biggest reason home-based businesses are so popular, however, is they can be operated with very low overhead.
There is no rent for office space, for example, and utilities are included. In fact, operating a business from a home can have tax advantages that make it even more appealing. If you think, however, that your home-based business will be covered under your homeowners’ insurance policy, you are taking a big risk. The problem is magnified by the fact that you may not know it is a problem until it is too late.
Let’s take a look at the premise for your homeowner’s insurance. It is designed to cover your home from losses due to liability claims and certain calamities. The keyword here is “home”. Once you begin to use a house for more than personal living space (like renting out space or conducting business activities) its use changes. Those activities would not be covered under your homeowners’ insurance policy. From an insurance company perspective, your home now becomes a place where commercial activity is taking place.
This is particularly risky if you have inventory, office equipment or have clients visit your home to conduct business. These items would likely not be covered under your basic homeowners’ insurance policy and you will have increased exposure to liability claims.
It can be relatively simple and inexpensive to protect your home-based business, however. Contact your independent agent and make them aware you have a home-based business and what is involved in the business. They can provide an addendum or rider to your policy that will ensure coverage for your business activities conducted at home.
Yes, there are a variety of reasons operating a home-based business makes sense, as long as you have it properly covered in the event of a loss. Contact us and we can help explain your options and prevent you from experiencing an unexpected and uncovered loss.
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