Does Your Home Business Have Risk?
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The short answer? Yes. Businesses operating out of homes still have risk, they’ve merely shifted it from a public storefront into a private residence. To unpack the nuances of this question, we’ll have to dive a little deeper.
Premises Exposure
If the business requires the customers to enter the home, then it has all the same risk it did at a commercial location.
A lot of home businesses, however, don’t require customers to enter the home; they either go see their customer, deliver their product, or conduct business through virtual means. If business owners travel to another location to show off product then their premise becomes the booth they’re selling from. For example, a farmer’s market or art festival. If the business visits the customer’s home then the customer’s location becomes their premises. For example, to install a product or provide a service.
In both these instances, the business could be sued for any property damage or injury that happens while they’re at those locations.
Risk With Shipping & Products
Even if the business doesn’t directly interact with customers at all, they still have risk. There’s risk when delivery drivers pick up packages they’re shipping. And there’s risk when they go to the post office to drop off packages themselves.
More importantly, the product itself may carry risk. Regardless of what the business produces, the business could still be subject to the same product liability as any manufacturer. If something goes wrong with their product and someone gets hurt, the company could be named in a lawsuit. Liability insurance is to defend a business if it’s named in a lawsuit.
Homeowner’s Insurance Is Not for Businesses
Virtually all homeowners policies have exclusions for business risks. Insurance companies want a strict divide between homeowners insurance and business insurance. In fact, if a home business owner relies on their homeowners policy for business purposes, they run the risk of having their homeowners insurance voided.
Insurance Options for Home Businesses
Many insurance agencies offer supplemental products for small home businesses. These products, however, are only meant for the smallest businesses; the larger the business, the harder it will be to find insurance for both the home and business.
If a business is just looking to cover the business’ property and not the home itself, some insurers will add on a little property insurance specifically for the business.
Before you determine what kind of insurance you need, you should consult a trusted business advisor. Feel free to contact us at D&A Insurance to find out which policies your home business needs.