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Mar 1, 2022

6 min. read

During the pandemic, many people started home-based businesses, such as pet grooming or selling handmade goods. You might assume anything related to your home is protected by your home insurance—but does it cover your business, too?

What happens if there’s a fire and your equipment, materials or merchandise are damaged? Or if a client slips and falls on your property? Here are five things to consider about coverage for your personal business under your home insurance.

What does home insurance cover?

Whether you’re the homeowner or a tenant, home insurance protects the physical structure of your home and your belongings. So, it would include expenses related to fire, water or wind damage, as well vandalism or theft.

This may extend to some business-related property, but it may not be adequate if you’re using specialized equipment or storing inventory at home.

A home insurance policy offers limited protection for books, tools and instruments necessary for a business. If you operate from your home, you should let your insurance agent know and change your policy to reflect any professional risks or losses.

Equipment breakdown

Your laptop may be insured under your home policy, but if your entire business is stored on a computer, you may want to consider additional protection.

CAA’s Home Equipment Breakdown Coverage protects your electronics and appliances from mechanical, electrical, boiler or water tank breakdowns. So, if a power surge damages your business phone, computer or sewing machine, for example, your insurance would cover the cost of repairs or a replacement.

Client mishaps

If clients are coming to your home for a service, such as a haircut, you’re likely not insured for liability under your home policy if they are injured.

That means that if a client slips and falls on the steps for example, you may be held legally responsible if they decide to sue you. Having commercial general liability insurance can protect your business from legal dispute losses.

Professional liability

If your client thinks you have made a mistake or claims you have been negligent in your work and it resulted in them losing money, they may hold you financially accountable.

If you are a graphic designer for example, and the client uses your work only to realize there are spelling mistakes, the client may pass the cost of those corrections to you.

Professional liability insurance, also known as errors and omissions, can help with legal costs if they decide to take you to court.

Making deliveries

If you’re making deliveries for your home-based business, find out if your personal auto insurance policy provides adequate coverage. Some policies offer limited business use, while others don’t include any at all.

Depending on the circumstances, you may need a commercial auto policy. If your vehicle is used specifically to transport people, merchandise or tools, or is used by others in your business, you should update your policy.

Every home-based business is unique, so talk to your insurance advisor about whether your home policy covers the risks specific to your side business and if you’ll need additional coverage to protect both your home and your business.

Get the right coverage

Unexpected damage to your home or business can be emotionally and financially devastating. A licensed CAA Insurance Agent can answer any questions you may have about updating your policy to meet your home business needs. Visit caasco.com/insurance/home for more information.

Image credit: SrdjanPav/iStock

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