The pros and cons of working from home are well documented. It’s nice to be able to work in your pajamas, and you can’t beat the commute! On the flip side, it can be isolating, and there may be distractions, like household chores that seem more appealing than that logo design you just can’t seem to get right.
But there is one risk to working at home that many people don’t talk about – or even think about. Your homeowners’ or renters’ insurance typically doesn’t cover work-related accidents or damage to business equipment, and this could leave you exposed.
If you work for a company, or even rent space in an office building, carrying liability insurance coverage is probably part of our lease agreement (tip: check your lease to see who is responsible for keeping walkways clear and floors dry). But if you are doing business from your home, you might not think you need coverage at all. Sadly, you’d be wrong.
Similarly, if you have specialized equipment that you use in the course of your business, loss of or damage to that equipment may not be covered by your homeowners’ insurance. This includes things like a photographer’s cameras or a high-end computer that a graphic designer or consultant uses. These types items would be covered under a business owners policy.
So what’s a freelancer to do?
Business insurance can protect you against claims or lawsuits arising from your business if you work from home. Business insurance can protect you if someone sues you because they tripped on the steps leading up to your home office. It can also protect you if a client says you did something wrong, or didn’t do something you should have. It can even cover the replacement of your business-critical equipment if it is stolen or damaged.
As a freelancer, you could be considered liable if a client slips on the floor coming into your house and breaks their wrist. Or, if you are at a client’s site and spill a cup of coffee on their server, damaging it, you could be responsible. These types of bodily injury and property damage claims could be covered by a general liability policy.
You could also be sued by a client if you did something you shouldn’t have, or if you didn’t do something you should have. Even if you didn’t make a mistake, you could find yourself embroiled in a lawsuit, which can be costly to defend. A professional liability policy, sometimes called errors and omissions or E&O coverage, could protect you.
If a computer or other important piece of equipment on which you rely to get your work done gets damaged or lost, a business owner’s policy could pay you for your loss. This type of coverage is usually bundled with general liability coverage.
Size Doesn’t Matter
If you think your business is not big enough to be sued, think again. A disgruntled client can file a lawsuit or make a claim for just about anything. Even if it turns out to be baseless, you still may have to pay a lawyer to defend you. And if you are forced to settle or are hit with a judgment and you’re a sole proprietor, your personal assets like your home could be at risk.
The good news is that you can protect your freelance business from these risks for a modest investment in business insurance. Learn more about business liability insurance.
Gyawu Mahama is an award winning marketer who manages U.S. social media and marketing at international specialist insurer Hiscox. Prior to Hiscox, Gyawu held communications and corporate social responsibility roles in the technology industry. He lives in New York where he’s a sought after expert on social media marketing. Follow Gyawu at @GyawuTweets.
The contents of this article do not offer legal, business or insurance advice related to the needs of any specific individual business.