These days, many Americans are stepping out of their comfort zone to become the CEO of their own companies. Since startup costs can be through the roof, it’s easiest to hit the ground running from your very own home. Whether you’re designing crafts for Etsy, heading up a marketing firm, or freelancing as a writer, you are considered a home-based startup and there’s a pretty good chance you’ll need insurance.
We chatted to our friends at CoverWallet to help you decide what you’ll need.
What qualifies as a home-based startup?
“Any business that is run out of a client’s home and has less than five employees. A home-based business can be anything from a professional running their own business and working out of their home office (not to be confused with telecommuting) to a craftsperson making items for Etsy. On the other hand, if you take someone like a contractor who has their office at home but works in the field all day, that would not be considered a home-based business.”
What are different categories of work that would need coverage?
“Almost anything you do should be covered in one way or another. Any business that has any risk (product, auto, general, professional, etc.) will need coverage.”
What kind of coverage options should businesses look into if they are home-based?
“At a minimum, General Liability should be purchased. If they have property of any sort (computers, inventory, etc.), then a Business Owner’s Policy is advised. From here, it all depends on what the business is doing. Are you a Professional Services Provider? Then Professional Liability/E&O. Do you wholesale and deliver crafts you make at home? Commercial Auto is something you’d look into.”
What are the common pitfalls that businesses might forget to think about?
“The biggest pitfall is thinking that your business is too small to need insurance. Remember, you might be small and may have limited clientele, but it takes just one error or one person getting hurt for your business to be hit with a lawsuit.”
Can renter’s insurance or a homeowner’s policy cover a home based business?
“It depends on the policy, but 9.9 out of 10 homeowners or dwelling policies will have a home-based business exclusion. As a home-based business can and usually will raise the risk of something happening exponentially, and it is not priced into the HO3/5/8 policy. If you have any doubts about what is or isn’t covered, we always advise you to look at your Policy Declarations and double check. Here is where having an Agent or a Broker helps as they can help you go through the sometimes 100+ pages to find the exclusion.”
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