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Home Based Businesses on the Rise

04/07/2010

Do you know how many of your clients are operating a home-based business? According to a recent survey, it’s likely more than you think. More and more people are finding ways to make money from home, whether they are cashing in on a hobby like crafting or running a law practice from a spare bedroom.

This post from Business Week, cites Census Data which shows the In Home Business trend rising through 2005. And while that data shows an increase through the economic boom, my understanding is that the number of people operating businesses from home has continued to increase through the economic downturn. Feeding this increase is the need to supplement incomes, a lack of corporate job opportunities and mass layoffs that have lead many to “go out on their own”. Of course technology plays a role too as it is increasingly easy to conduct business from anywhere as long as you have a computer and an internet connection. For many, this is an environment ripe for entrepreneurship.

There have been many phone calls into the Number One Agency that start with “I need a market for a client who runs a ______ business from home.” You can insert your choice from the following list into that blank: screen printing/beekeeping/photography studio/law firm/piano lessons/personal training/decorating/antique gallery/art studio/consulting firm/insurance agency/gift basket making/baking ect ect ect. Fortunately, the Number One Agency offers RLI’s In Home Business Product and we can happily write policies for many of these inquiries. However, it seems that many are overlooking their insurance needs.

Last week’s issue of The Standard referenced a study done by the IIABA that cites that 60% of Home Based businesses are not insured. The number one reason people were forgoing insurance was because they believed that they were already covered by their homeowners policy. As agents know…this is not always the case. The unendorsed homeowner’s policy provides scant coverage for even a small business – let alone one that has employees.

Making sure to ask clients whether or not they operate a business at home or have a “money making hobby” is important. Many of the self employed will want to fill any potential gaps in coverage and for those who refuse; your agency will want to obtain a sign off that can put an E&O claim to bed early should a dispute arise later.

Are more of your clients running a business at home? Have you asked recently?

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