Today, many consultants, salespeople, and entrepreneurs work from home. Even more people work in home-based businesses like direct-sales. And if you believe late night TV ads, thousands of people work an hour or two a day in their pajamas and make six figures once they get hooked up by calling the right 1-800 number (we are skeptical of those claims). For those who are REALLY working at home, the advantages are huge. But while convenient, these work arrangements and home-based business ventures raise certain insurance issues. Standard homeowners policies do not cover liability for business activities and homeowners policies usually have very low property sub-limits for any property that you use in conjunction with a business—in some cases there is no coverage at all. In some cases we have seen enterprising folks open businesses in their unattached garages or outbuildings and unwittingly void all coverage for that building under their policy.

What is the answer? If you thought I was going to suggest something other than buy insurance you are reading the wrong blog! Seriously, there actually ARE some non-insurance ways to reduce this risk that we can discuss, but in most cases, a simple home-business endorsement to your home policy or a stand-alone business owner policy is the right answer.

Many home insurers will cover businesses like accountants or architects offices on their policy for a small fee but this nominal coverage doesn’t take care of professional liability for errors and there can still be other losses that fall through the cracks. For most businesses the right fit will be a business owners policy, which is more comprehensive than the add-on endorsements you can get with your homeowners policy. Many people think a business policy means big bucks but that is not always the case these days. Even some home-based business in the direct sales field seek protection with business policies. Products and premises (slip and fall) risks can vary depending upon what you sell and whether you modify it but there is usually SOME risk and often times people in direct sales need coverage for the product they are carting around to parties, shows, and deliveries.

No matter what type of business you are contemplating letting into your home, at least consider the option of insurance to protect yourself. We think you will sleep easier knowing that someone else is standing behind you if something goes wrong. It’s a better backup plan than getting a second (or third) job to pay for damages or lawsuits!