Two Must-Do’s To Protect Yourself from the Risks of Running a Home-Based Business
The New York Times recently reported on the death of a guest at an Airbnb rental. When the man swung on a rope swing on a Thanksgiving morning, the tree trunk it was tied to broke and came down on his head — “immediately ending most of his brain activity.”
It’s not so shocking that someone would die at an Airbnb rental. As the Times notes, “Airbnb hosts are putting up so many people each night that fatal accidents are almost inevitable.”
But who assumes the risk of such accidents?
Assumption of Risk
Until about a year ago, Airbnb hosts were on their own with regard to liability, and many may have assumed (without actually checking) that they were covered by their homeowner’s insurance.
However, most homeowner’s and renter’s insurance policies exclude coverage for commercial activity.
Airbnb now offers free insurance coverage for hosts. HomeAway, another home rental company, encourages homeowners to take out an insurance policy that covers loss of business as well as liability for personal injury to guests in vacation rentals.
Risks for Home-Based Businesses
Airbnb hosts aren’t the only people who face risks. Any home-based business owner might need to deal with:
- A delivery person or customer who slips and falls on icy steps
- A home office that catches fire (as in HBO’s Silicon Valley)
- A disgruntled customer who sues over allegedly shoddy goods or services
How can you protect your home-based business?
1. Get Insurance
According to Entrepreneur Magazine, 60% of home-based businesses lack adequate business insurance. Insurance options for home-based businesses include:
- Getting an add-on or rider to your regular homeowner’s or renter’s insurance. This might cost as little as $100 per year and provide you with about $2,500 of additional coverage. That amount would cover a modest amount of business equipment but would barely make a dent in a serious personal injury claim if you routinely have business visitors at home.
- Getting an in-home business policy. This might cost about $250-500 per year and cover about $10,000 in losses and liability.
- If you need more than $10,000 in coverage, you could get a comprehensive business owner’s policy similar to what brick-and-mortar stores carry. This may also cover risks like professional liability, if you run a service-based business.
More information on insuring your home-based business is available here.
2. Check Your Lease
If you rent or lease the home where you conduct business, check to what the lease says about insurance. Even if your landlord carries insurance for the building as a whole, that won’t protect you from all risks associated with your business.
Also, if your lease prohibits you from running a business at home, your landlord’s insurance probably won’t cover you for any business-related claims.
Understand Your Contracts before You Sign Them
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The information and materials in this blog are provided for general informational purposes only and are not intended to be legal advice