Two years ago, Patrick retired after working for the City of Seattle for 30 years. He enjoys retirement from missed professional interaction, so he decided to open a small consulting business. Patrick now has three clients and does most of his consulting work out of his home office.

Patrick’s situation is common. More than half of all U.S. businesses are now based out of an owner’s home, says the U.S. Small Business Administration.

According to Independent Insurance Agents & Brokers of America, sixty percent of these home-based businesses lack adequate business insurance.  Why? Explains Entrepreneur magazine,

One reason owners forgo insurance is confusion over what may be already covered by a homeowner’s or a renter’s policy. But most home-business owners have little or no coverage from their homeowner’s policy. What’s more, if you file a homeowner’s (or renter’s) claim for losses sustained by a previously undisclosed home-based business, your insurer may refuse to cover it or cancel your policy…

The typical homeowners policy provides minimal coverage for business property on and off your home premises and no liability coverage relating to business activities, including any hobbies you may make money from. This puts entrepreneurs and hobbyists at serious financial risk.

Take the following example: Michele is new a consultant for LuLaRoe, a popular women’s apparel company. She is excited to officially launch her business and has ordered inventory to be shipped to her home. The UPS driver making the inventory delivery slips and falls on Michele’s front porch, suffering injuries and lost wages. Michele’s homeowners insurance company denies the claim.

Or this: Kristen, a photographer, stops at a local coffee shop on her way to photograph a wedding. Kristen leaves her camera bag in her car for five minutes while purchasing her coffee. When she returns to her car, her front passenger side window is broken and camera bag is gone. Kristen’s renters insurance company denies her theft claim, and she has no liability protection if the bride and groom sue.

In both of these situations, a home-based business policy would have protected Michele and Kristen for as little as $158 a year.

Do you operate a business out of your home or make money from a hobby? Make sure you’re protected. Click here to complete our online quote form, and you’ll receive a quote after answering 11 easy questions.