Running a business from home? Read this first.

This time of year a lot of people start something on the side. Holiday baking orders. Wreaths and crafts. Online sales. Bookkeeping or tax prep out of a spare bedroom.

Here's the short answer to a question I get a lot. Your homeowners policy probably does not cover your business. Some policies give you a little. Most give you very little. And almost none cover the liability side of it.

I've been in insurance for 24 years. This is one of the most common gaps I see. The good news is it's usually an easy and affordable fix.

What your homeowners policy leaves out

A standard homeowners policy is written to protect a home and a family. It isn't built for a business.

Business property is usually capped. On many policies that limit is around $2,500 for business property kept at home. It can be even less once that property leaves the house. Think about what your inventory, laptop, printer, or equipment would cost to replace.

Business liability is usually excluded. If a customer slips on your steps while picking up an order, your homeowners liability may not respond. The same goes for a claim that something you made or sold caused an injury.

Lost income isn't there either. If a fire shuts you down for a month, a homeowners policy won't replace the money your business would have made.

Every policy is a little different. That's why it's worth a quick look at yours.

A few situations that catch people off guard

A home baker sells cookie trays for the holidays. A customer gets sick and blames the food.

A photographer keeps $8,000 in cameras and lenses at home. A break-in takes most of it.

A hair stylist sees clients in a converted basement. A client trips on the stairs and breaks a wrist.

An online seller stores inventory in the garage. A water leak ruins a season's worth of product.

In each of these, the homeowners policy would likely pay very little or nothing at all. These are small businesses. The losses are not small.

Your options, from smallest to biggest

The right fit depends on what you do and how much of it you do. Here's how I usually walk people through it.

A home business endorsement

This is an add-on to your homeowners policy. It raises your business property limit and can add some liability. It works well for very small operations with few customers coming to the house. Not every carrier offers it, and some types of business don't qualify.

An in-home business policy

This is a separate policy made for businesses run from a residence. It usually gives you higher property limits, liability, and sometimes lost income coverage. It's a good middle ground for a lot of side businesses that are starting to grow.

General liability

If your work happens mostly at customers' homes or at events, general liability may be the piece you need most. Vendors at craft fairs and markets are often asked to show proof of it before they can set up.

A business owners policy (BOP)

A BOP packages property, liability, and business income together. It's the standard choice once a business has real equipment, inventory, or steady customers. It costs more than an endorsement. It also covers a lot more.

If you have employees, even part time for the holidays, workers compensation may be required in your state. That's worth a separate conversation.

Don't forget about your car

This one surprises people. Your personal auto policy may not cover you while you're using the car for business.

Delivering orders is the big one. So is driving for a delivery or rideshare app. Some personal policies exclude it outright. Others need an endorsement added.

If you're on the road for your business, let me know. A quick change now is a lot better than a denied claim later.

A few questions to ask yourself

Do customers ever come to your home?

What would it cost to replace your equipment and inventory?

Do you sell food, products, or anything someone could get hurt using?

Do you drive for your business?

Do you have anyone helping you, even part time?

If you answered yes to any of these, it's worth a conversation.

Let's take a look together

I'm happy to review your homeowners and auto policies and tell you where you stand. If there's a gap, I'll shop it with the carriers I work with and find the right fit for your budget.

You can reach me at 812-551-4630 or angelajohnson@premierinssolutions.com. You can also visit www.premierinssolutions.com.

When you call, you'll be talking to me. Let me know if you have any questions.

Angela

Premier Insurance Solutions