More than half of Americans operate home businesses, yet many lack adequate coverage. Securing costly assets while protecting liability liability is key.
Selecting the proper home business policy requires taking an inventory of both your equipment and risk profile. Here are three policies worth exploring: a) homeowners policy endorsements; b) in-home business policies; and c) business owners policies (BOP). Each provides different property and liability coverage.
1. Business Owners Policy (BOP)
A Business Owners Policy, or BOP, combines property and general liability coverage into one policy. The property portion protects owned or leased space, furniture fixtures, and inventory while the liability coverage safeguards against claims for bodily injury or property damage from day-to-day operations.
However, BOPs typically have size and revenue restrictions that preclude larger companies with complex risks from purchasing coverage under these policies. A commercial package policy (CPP) may provide more options in these cases; additionally, a BOP may exclude coverages like workers’ compensation and business auto – these can usually be added via endorsements.
2. In-Home Business Policy
Many home-based business owners neglect the need for business insurance, either because they believe that their homeowner’s policy provides sufficient coverage or they don’t wish to incur an extra premium payment.
At only a few hundred dollars annually, a home-business endorsement to your homeowners or renters policy provides ample protection for smaller home-based businesses that generate less than $5,000 in revenues annually. It’s an ideal solution for these startups!
For larger operations that need additional property and liability protection, business owners’ policies (BOPs) provide comprehensive general liability and property coverage at a fixed premium cost.
3. Business Owners Policy (BOP) Endorsements
The Business Owners Policy (BOP) offers an economical yet comprehensive solution for many small businesses. It combines key insurance benefits into one package to offer tangible value to those eligible and their insurers/agents alike. BOP coverage typically exceeds monoline standard policies while general liability can be tailored with various endorsements available through multiple endorsements.
Property coverage provides your business with protection from losses due to fire and theft, while general liability covers you against liability lawsuits from third parties, such as bodily injuries to customers or damage to their property as well as claims of false advertising, libel/slander etc.
4. Commercial Auto Policy
Contractors, landscapers, and other tradespeople who rely on cars, trucks, or vans owned or leased from other sources for transporting materials to job sites must carry commercial auto coverage policies with liability, physical damage, medical payments, and uninsured motorist (UM/UIM) coverage included in them.
Business owners whose employees run errands may wish to consider adding hired and non-owned auto coverage as an extension to their commercial auto policy, which expands liability limits to cover accidents involving personal vehicles that are hired, rented, or borrowed for work-related use.
Other common policy add-ons for businesses may include roadside assistance, new vehicle replacement cost coverage, rental reimbursement, and gap insurance for car loans or leases. Each policy can often be customized to meet the unique needs of each business.
5. Professional Liability Policy
Professional liability, often referred to as Errors and Omissions insurance (E&O), provides professionals and businesses such as accountants, architects, real estate agents, lawyers, designers, and consultants with protection against claims for negligence or other forms of malpractice that result in financial losses. While they don’t cover bodily injuries or property damages which would typically fall under general liability policies’ umbrella coverages.
Professional liability policies often operate on a “claims-made basis”, meaning only incidents which take place during the policy period are covered. This may cause coverage disputes when claims are submitted; insurers could decide to deny or cancel policies altogether.
7. Business Interruption Policy
Business interruption insurance reimburses for lost net income and ongoing expenses when property damage forces your business to close, such as payroll (including non-exempt employee overtime), rent, taxes, loan payments, and moving costs.
Contrary to commercial property, which pays only for actual physical damage, business interruption (BI) covers lost revenues caused by perils such as fires, floods, earthquakes, or mudslides that lead to shutdowns – as well as restoration periods which can last up to one year after such events occur.
About COVID-19 pandemic, questions have arisen regarding whether an insurance policy covers losses resulting from this virus. Insurance professionals advise clients to review the terms of their policies carefully and consult legal representation for optimal recovery of losses caused by COVID-19.
8. Business Owners Policy (BOP) Endorsements
BOPs (bundled property and liability policies ) provide real advantages to businesses that qualify. These benefits include cost savings (compared to purchasing separate policies), simplified management of insurance needs, and protection against certain business-related risks.
BOPs often include business personal property coverage that provides reimbursement for items like furniture, inventory, and equipment lost due to theft or accidental loss. Furthermore, product liability and completed operations policies protect companies against claims related to the products or services sold or provided by them.
Notably, BOPs do not cover workers’ compensation or commercial auto policies and these must be purchased separately.
9. Homemade Goods Policy
Homemakers face unique risks when it comes to running their businesses from home. An employee slipping and falling on the job could bankrupt your bakery; mislabeled food that causes allergic reactions from customers could leave your bakery open to litigation – both threats covered by most homeowners’ or renters’ policies but not by homemade goods policies. A homemade goods policy protects home-based bakeries against such unique hazards not covered by regular policies; for more information regarding how it could benefit your bakery business contact an experienced insurance agent who can customize a policy specifically tailored for your bakery business from start-up to closure!
