Many businesses of all sizes have shifted their operations to remote work and working from home. Recent data from the Global Workplace Analytics Global Work-from-Home Experience Survey found that 88 percent of office workers have been working from home more than one day per week, and 68 percent say that they are “very successful” working from home.
But if you’re a small business owner who is working from home for the first time, or if you need to work from home just occasionally or a few days a week, how might your business insurance coverage need to change?
Depending on the size of your business and what kind of business operations you handle at home, you might need to get a new work-from-home insurance policy, or otherwise adjust your small business insurance to suit your needs.
Learn more about work-from-home insurance and how you can stay covered while running your business from home.
Consider Your Business Risks When Working from Home
When deciding whether to buy business insurance or change your insurance coverage, it’s important to take a strategic look at your overall business risks. Ask yourself:
- How has working from home changed the way you do business?
- Are you storing inventory or using business equipment at home?
- Do you have a home office where you meet clients?
- Do you have employees or contractors coming to your home?
- Are you providing professional services at home or storing vital business records at home?
- How valuable is the business property/equipment that is kept at your home?
- Do you keep sensitive/confidential data or customer information on a computer/server that is stored at your home, or do you use a cloud-based service?
- Do you use a car or truck primarily for business purposes?
Depending on what types of risks you face, you might need to change your insurance coverage accordingly.
Work-from-Home Insurance: Are You Already Covered?
Before you buy business insurance, check your existing homeowners insurance policy to see if you are already covered for some of the risks of working from home. Some homeowners insurance policies offer a limited amount of liability protection or protection of business equipment that is stored or used at your home.
However, this protection might not be enough for your needs. For example, according to the Insurance Information Institute, the standard homeowners insurance policy might only offer coverage for $2,500 of business equipment.
You can buy an endorsement to your homeowners insurance policy that provides extra coverage for a home-based business. Depending on your insurer and your policy, you can boost the amount of coverage for business equipment when working from home, and expand the amount of liability protection for your work-from-home business activities.
In-Home Business Insurance
Even if you already have homeowners insurance coverage, you might need more coverage or a different policy that is specific to the concerns of running a business at home.
In this case, you should consider buying In-Home Business Insurance. This type of insurance can provide more complete coverage for certain risks and possible costs of running a business at home, such as replacing damaged or stolen business equipment, recovering critical business documents and repairing business property. This type of insurance also usually includes general liability coverage of $300,000 to $1 million.
What happens to your business in case your home gets damaged or destroyed by a natural disaster or fire? If your business is interrupted or has to shut down in case of damage to your home, your In-Home Business Insurance policy can provide you with income replacement coverage to help you make payroll and pay your bills for a certain amount of time or at a certain level of replacement income.
Business Owner’s Policy
In case your insurance needs can’t be covered by a simple In-Home Business Insurance policy, you can go one step further and get a customized Business Owner’s Policy that addresses the complete picture of specific risks and financial impacts facing your business.
A Business Owner’s Policy (BOP) lets you create a comprehensive package of insurance coverage for your home-based business that is suited to the complex risks and liabilities of managing employees, covering the costs of rebuilding business property and protecting against special risks, such as a hacker shutting down your ecommerce site or a data breach of sensitive customer information. A BOP can also include expanded liability coverage and income replacement.
Depending on the size of your business, what industry you’re in, how you serve customers and how you work from home, an insurance professional can help you create a BOP that is designed for your business’s specific risks and financial needs.
Seek Professional Help
Work-from-home insurance can be simple or more complex, depending on what type of business you have and how extensive your business operations are. If you’re a solo entrepreneur or consultant who just needs some additional business liability coverage, you might be able to get a simple endorsement to your homeowners insurance policy. If you have a more elaborate business with expensive business equipment or sensitive data stored onsite at your home, you might need more extensive coverage from an In-Home Business Insurance Policy or BOP.
Whatever business insurance you might need, consider talking with an insurance professional who can ask you questions and help you understand the complete picture of your business risks and how to protect yourself. Even if you’re working from home, you still want to make sure that your risks are covered, so your business can keep making money for a long time to come.
Ben Gran
Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.
