Side hustles and home-based businesses are on the rise. We are living in a time where it has never been easier earn an income from home, especially through technology and social media. Over the past year, in the midst of a pandemic, we saw side hustles and home-based businesses become a necessity for many looking for new ways to earn extra money.
According to a survey conducted by Side Hustle Nation, nearly 45% of Americans report having a side hustle, equating to roughly 70 million people.
If you’re reading this, there’s a good chance you fall into this category.
Perhaps you started offering professional services online.
Maybe you are handcrafting products to sell on Etsy and at local markets and craft shows.
Or you could be inviting clients to your home for tutoring or hair appointments.
In all of these cases, the risk is real, and it’s likely not covered by your standard homeowners insurance policy.
While most homeowners insurance policies do cover a limited amount of business equipment, it’s likely that what you own is worth more than your policy’s limits. Also, your homeowners’ liability insurance probably won’t cover any injuries that may occur to the employees or clients that you have on the premises.
Common coverages for home-based businesses include:
If you use any kind of equipment to run your home-based business, including a computer, fax machine, printer, furniture, etc., you should have business property insurance to be insured against loss or damage to property used in your business. That’s because your homeowners’ policy doesn’t typically provide coverage for business equipment losses by fire or flood. Instead, you’d need business property insurance.
Liability insurance is necessary when you have clients come to your house for business purposes. It protects you and your home-based business from being liable for damages caused to another person or property. Again, your homeowners’ policy won’t protect you from claims made from business visitors who may have been injured at your home. For example, if someone making a business delivery to your home slips and falls, you’ll need liability insurance, not homeowners insurance, in order to be covered.
Similar to professionals working out of their home, professionals working inside their home need professional liability insurance. If you’re a consultant, professional liability insurance can protect you against potential negligence or failure to deliver claims made by your clients.
Product liability insurance protects your business for damages to property or a person caused by a product you designed, manufactured or supplied.
If you need to make (or pick up) deliveries, visit clients or otherwise use a vehicle for business purposes, your personal auto policy won’t cover the business use of the vehicle. Instead, you’ll need business automobile coverage, which will provide coverage if you are in an accident.
There are other home-based business insurance coverages that may be important, depending on your business. For example, if your business has employees, you may need workers compensation insurance. Commercial crime insurance protects against losses from equipment theft, fraud and other crimes.
Depending on the type of home-based business you have, not all coverages apply, and other coverage options may be available. Just ask us—we can help!
Just because you operate a business in your home doesn’t mean your exposures are covered—purchasing the right insurance coverage today may be the difference between success and failure. A homeowners insurance policy is designed to cover personal exposures, not business exposures. Here’s what you need to know to make sure you’ve got all your business insurance bases covered.
To understand your risk exposures, it’s important to review your property value and business exposures.
To get you thinking, here’s a list of questions to consider:
Based on your business needs, you have three basic coverage options to choose from, depending on your level of risk:
This provides the least amount of coverage, and therefore isn’t ideal for most home-based businesses. While it may provide enough coverage for a freelance writer or another profession with no business foot traffic, it’s not enough for someone who employs others, has clients visiting his or her home, or has valuable business equipment and/or inventory.
More comprehensive than a homeowners policy endorsement, in-home business coverage is a standalone policy that provides higher amounts of coverage for business equipment and liability.
A BOP bundles property and liability insurance into one policy. Created specifically for small- to mid-size businesses, a BOP covers your business property and equipment, loss of income, extra expenses, and liability. It’s the most comprehensive property and liability option. It doesn’t include workers’ compensation, health or disability insurance, which are available as separate policies.
So, does your side hustle or home-based business need insurance? It certainly depends the type of business you’re operating, but you’ll be much better off having a policy in place. While your passion gets you up in the morning, don’t let the risk of operating keep you up at night.
Anthony began his insurance career in 2011 joining the team at GIS in January 2019. He specializes in auto, home, umbrella, boats, motorcycles and RV’s. Anthony grew up in La Porte, graduating from La Porte High School in 2005. He currently resides in La Porte with his wife Morgan and sons, Graham and Landon. In his free time, he enjoys traveling with his family, golf, football, racing, baseball, and volunteering with the Boy and Girls Club of Michigan City.