Home-based businesses are becoming increasingly popular in Florida due to their flexibility and cost savings, as well as Florida’s relatively business-friendly tax and business benefits. However, running a home business introduces unique risks that a standard homeowners insurance policy does not cover. Entrepreneurs, freelancers, consultants, and artisans working from home must consider additional umbrella insurance to protect their business and personal assets, lest a future issue arise and threaten everything they have built over the years.
The Risks of Being Underinsured
Home-based business owners often assume that their homeowners’ insurance will cover all business-related risks, but this is a misconception. Homeowners insurance typically covers a limited amount of business property and does not include liability coverage for business activities. In most cases, the focus of home insurance is simply to protect the homeowner’s assets from various issues, not the business operations inside.
Operating a home business without adequate insurance is often a recipe for disaster. Insurance is rarely a primary expense of home businesses, but one singular lawsuit or claim against you that insurance would otherwise protect against can bankrupt a fledgling startup. Without sufficient coverage, legal expenses could jeopardize your business and personal assets.
Despite not being a direct risk to your home business, the simple fact of not having insurance for your new business can place immense stress on you during a super important time in your life. You never know when liability risks will appear, and they may, in fact, be more common during the initial stages of a business that doesn’t have its bearings yet. It’s a lot like driving without a license or with a broken taillight – not advisable and very risky, especially when you consider that addressing the issue isn’t very difficult. Getting commercial umbrella insurance for your new business doesn’t have to be complicated, especially when you work with a local insurance agent who knows what to look for in a new policy.
Benefits of Commercial Umbrella Insurance for Home Business
An umbrella policy can be considered a financial safety net for your business, covering claims exceeding any liability coverage you already have. For example, if a client visits your home office and suffers an injury, your homeowners’ insurance might only cover a portion of the medical expenses and potential legal costs. An umbrella policy that meets your needs and applies to commercial dealings would step in to cover the rest and prevent you from needing to pay out of pocket.
Umbrella insurance also provides coverage for scenarios that standard liability policies typically exclude. These can include personal liability situations such as libel, slander, and false arrest. For home-based businesses where personal and professional activities often overlap, this broader coverage is particularly valuable to prevent insurance from trying to deny a claim based on an out-of-coverage activity. For instance, if a personal or professional social media post leads to a defamation lawsuit, an umbrella policy would cover legal fees and settlement costs, especially if you have overarching umbrella coverage for both personal and commercial acts.
Another benefit of umbrella insurance is its cost-effectiveness relative to the amount of coverage it provides. Despite offering significant additional protection, umbrella policies are generally affordable because of their more niche area of protection. You may not anticipate getting sued every single month, but when you do face significant issues, you will be glad to have commercial umbrella insurance.
If you aren’t sure what your current policy is, how a previous policy works within the framework of a brand new business, or fear that your current coverage is lacking, the best way to learn about your options is to work with a local insurance agent. They have close partnerships with insurance carriers, allowing them to find the best plans that are reliable, safe, and well-suited for your situation.
Anderson & Associates Insurance Group can provide clear guidance on what kind of commercial umbrella insurance is best for your business. Contact us today to speak to a member of our team and get started on protecting your business.
