By show of hands…how many of you are working from home today?
Considering what has become our new normal, we thought we would take some time to give you a brief overview of the difference between having a business in your home, versus a home office.
A home office is what most of us are utilizing during this pandemic. Your office equipment typically consists of a computer and printer. These items may be owned by you or may be owned by your employer, or perhaps as in my case, a little bit of both.
If you currently have a homeowners or tenant policy, the office equipment that you own would most likely be covered under your personal property or contents coverage if it is typically used for personal purposes.
The laptop I am currently using belongs to my employer. While my employer may already have it insured, I may have some limited coverage for it under the liability portion of my homeowner’s policy. Keep in mind that it would only be for losses for which I am considered “liable”. Examples include dropping the laptop or accidentally spilling my morning cup of coffee on it.
Homeowners policies typically exclude bodily injury, property damage and liability arising out of, or in connection with a business conducted from an insured location, or engaged in by an insured, whether the business is owned or operated by the insured or employs an insured.
You will need check your policy for the specific limits but many homeowner’s policies limit coverage for Business Personal Property to $2,500 on the residence premises and $1,500 off the residence premises. This endorsement only applies if you are the actual business owner, not an employee of a business.
Running a business from your home would require more insurance than what is offered under a homeowner’s policy. There are three items that will trigger the need for more coverage:
- If you have customers or employees coming to your residence
- If you store “product” at your home
- If you are running any type of business from an “Other Structure” on your property.
There are 3 options to investigate if you require more coverage:
- Inquire if your current home policy can be endorsed to provide some coverage for business equipment and some minimal liability coverage. This can often be done at minimal cost.
- Add a Home Business Policy/Endorsement: This type of policy provides broader coverage than a simple endorsement. Some of the coverages offered, aside from business property, would be business income, extra expense, personal liability, and medical payments coverage. Additional business property covered includes accounts receivables and valuable papers and records.
- Purchase a Business Owner’s Policy or BOP: A commercial policy designed for small to mid-size businesses which offers the most comprehensive coverage.
As always, should you have questions reach out to your agent. It is better to know up front how items will be covered, or what coverages are excluded, before a loss occurs.
Kellie Eschbach, Personal Lines Manager
