While the pandemic ushered in unprecedented layoffs and furloughs throughout the country, it also sparked ingenuity with individuals looking to set up their own businesses at home or turn a long-time hobby or passion into a part-time or full-time home business.
“People don’t realize that liability and property risks resulting from their home-based businesses are not covered under their Homeowners, Renters or Dwelling Fire policies,” says Brandon Goodin, RPS Underwriting Manager.
In fact, most individuals don’t even think about the fact that they need special insurance to cover their business activities at home.
“They believe because they haven’t set up a formal structure, such as an LLC, they are actually not engaged in a business. But this isn’t the case. If you’re receiving money for a service or product, it’s more than likely considered a business,” Goodin explains.
Discuss Home-Based Business Insurance at Renewal
Goodin recommends retail brokers review potential exposures when their personal lines clients’ policies are up for renewal, and ask probing questions such as:
- Are you being paid for your expertise and advice?
- Are you selling homemade products online or at farmers markets?
- Do you have vendors, delivery drivers and even clients coming to your home for business purposes?
- Do you carry inventory for the products you sell or services you provide?
- Do you own business equipment critical to conducting the business that could be at risk for physical damage or theft?
If the answer to any of these is yes, it’s time to purchase Home-Based Business insurance.
Related Article: Risk Placement Services to Offer Home Based Business Insurance Product with AXIS Insurance
Which Home-Based Professions Need Coverage?
All professionals providing client services out of their homes need properly tailored insurance coverage, such as those providing services in accounting, interior decorating and design, consulting, graphic design, writing, marketing, photography, coaching, translation, education, and fitness.
In addition to insuring professional classes, RPS’s Home-Based Business policy, for example, covers crafters for General Liability insurance, including those who make and sell goods such as jewelry, leather crafts, ceramics, and wood products.
“You may, for instance, have clients who design and produce jewelry in their home and sell their pieces on Esty or who make leather purses and wallets and sell the goods at the local flea market,” Goodin explains. “These individuals need coverage in the event of bodily injury or property damage due to the products provided.”
Property insurance for business personal property is also available to both professionals and crafters, with limits of $5,000 or $10,000.
“If you make ceramics, for example, and there is a fire, and the inventory along with the materials and equipment to make the pieces are damaged, a homeowners policy would not step in,” says Goodin. “Our specific Property form provides coverage for furniture, inventory, stock and business equipment used in the operation of the business.”
The Lowdown on RPS’s Home-Based Business Product
With all of the above in mind, RPS has launched a Home-Based Business insurance eCommerce product to address the gaps in coverage for individuals running a business out of their homes, designed for a variety of classes of businesses.
“As with our other products on our small business platform, we’ve made it easy to write the Home-Based Business policy,” says Goodin. “All you need is to provide what the applicant does, the address and annual revenue, answer a small number of questions, and you’ll get a quote.”
A combined policy form includes separate limits for General Liability of up to $1 million and Professional Liability up to $2 million. Highlights include full Prior Acts coverage and an automatic one-year Extended Reporting period for Professional Liability. The General Liability policy includes blanket additional insured and blanket waiver subrogation endorsements.
The policy is available via RPSSmallBusiness.com throughout the country (except in Hawaii and Alaska) and is written on an admitted basis with Axis Specialty Insurance.