The "Legal-Ease" Glossary
This is an insurance policy that protects your personal real estate and its contents. Just as Property Insurance protects your commercial real estate, a homeowner's policy can protect your home against structural damage or loss, contents damage and loss, and liability coverage.
If you’re a home-based business owner, you may think your homeowner’s policy is killing two birds with one stone by guarding your home and your business. But the truth is that homeowner's insurance policies don't cover business-related property or liabilities. (You can learn more about the exclusions of homeowner’s policies in the infographic “Is Your Home-Based Business Covered?”)
Because more than half of the businesses in the United States are based out of the owner's home, according to the US Small Business Administration, you can see why the limits of a homeowner’s policy might be worth noting. Sure, your home might not be open to the public, but that doesn’t mean your home premises aren’t used for business purposes all the same. In fact…
- If a postman simply drops off packages and supplies for your business, you could have lawsuit on your hands if he slips and falls on your property. And your homeowner’s policy won’t help fund your legal expenses.
- If a fire destroys your home office, you may have to pay to replace your business property and repair your office out of pocket.
- If you bring a client’s laptop home and accidentally spill coffee on it, you could be sued for repair expenses, and only a commercial liability policy can help with that.
There are a couple routes you could go to fill the coverage gap left by your homeowner’s insurance policy. You could add a commercial rider to your policy, but that option usually doesn’t offer much coverage. The better route is to apply for a Business Owner’s Policy, which bundles General Liability and Commercial Property Insurance together for low-risk small businesses.
For more resources, check out our blog series on home-based businesses.
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