Home businesses have become increasingly common in recent years. The low overhead costs combined with the flexibility that allows for a work-life balance make it a popular route for many entrepreneurs.
According to small business loan comparison site Fundera, there were approximately 15 million home-based businesses in the US in 2019, accounting for roughly half of all businesses. While operating out of one’s home may not come with the same amount of liabilities as running a large company, there are definitely still risks that business owners face. Therefore, it’s important to understand the key types of insurance coverage for home business services.
In this post, we’ll discuss three specific professions including dog sitting, massage therapy and hairstyling, the liabilities professionals face when operating out of their home and the types of coverage generally required.
Liabilities for Dog Sitters
There are four main liabilities dog sitters face. Perhaps the biggest is if a dog is injured or dies while in their care. An example would be a dog jumping out of a dog sitter’s vehicle, landing wrong and breaking their leg, writes Pet Sitters International, an educational association for professional pet sitters. Given the unpredictable nature of animals, accidents like this are an ever-present concern for dog sitters.
The second is if a dog is stolen or escapes. Maybe the sitter takes a dog outside for a walk and it gets off the leash and takes off. In this scenario, the sitter would be held liable for the defined value of the dog under their state’s legal statutes, explains veterinarian Ed Branam, veterinary and animal services program manager for insurance provider Safehold Special Risk.
The third is if a dog hurts someone else while in a sitter’s care. Pet sitting software Time To Pet provides a scenario that while a sitter is walking a dog, it bites someone passing by. This could lead to costly medical bills for the person suffering the bit and subsequent lawsuits.
The final liability is damage to personal property. If a dog sitter who operates out of their home experiences major damage due to fire, theft or vandalism to their property, it could result in a significant financial blow and potentially put the dog sitter out of business temporarily, taking a toll on their income.
Coverage for Dog Sitters
General liability insurance is usually the first type of coverage dog sitters will want to purchase. It’s fairly comprehensive and will protect them against third party claims that stem from bodily injury or property damage that’s due to their negligence or the negligence of any employees or independent contractors they hire, says Business Insurers of the Carolinas. This would cover a dog sitter if the dog becomes injured or if the dog bites someone.
Animal bailee is another form of coverage that’s important. It covers expenses related to a dog’s injuries or death, explains the team at Pet Care Insurance, which a sitter is legally liable for while the animal is in their care and will also cover them if the animal is stolen or escapes.
It’s also smart to purchase a business owner’s policy (BOP) to protect a dog sitter from any damage that may occur to their home. “Properties covered by a BOP usually include buildings (owned or rented, additions or additions in progress and outdoor fixtures),” notes personal finance editor at Investopedia Julia Kagan. “The BOP will also cover any business-owned items or items owned by a third party but kept temporarily in the care, custody or control of the business or business owner.”
Liabilities for Massage Therapists
The massage therapy industry has grown considerably from a projected $6 to $11 billion in 2005 to $18 billion in 2018, according to the American Massage Therapy Association. It can be a rewarding career, but there are some inherent risks that come along with giving a massage.
In terms of specific liabilities, the main one is customer injury. An example is when a customer ends up falling off a massage table while a masseuse steps away temporarily. It’s not the norm, but it’s certainly a liability that comes along with this profession, writes the team at wellness and foot care products company Agony of DaFeet.
Another is when a masseuse ends up worsening an existing injury. The neck is especially vulnerable, says former massage therapist Paul Ingraham at PainScience, and there’s always a danger — however remote — that the wrong technique could result in something devastating like a spinal cord injury.
The other major liability is being the victim of theft or vandalism. A single massage table can cost up to $4,000 says business advisement company TRUiC. And when you add in other equipment like table warmers, essential oils, sheets and lotion, it can add up in a hurry. Without the right type of insurance coverage, a massage therapist may end up having to pay out of pocket to replace these items.
Coverage for Massage Therapists
To protect themselves, independent agent resource Trusted Choice explains that a massage therapist will usually want to purchase three key types of coverage — general liability, professional liability and a BOP.
General liability will cover professionals for any accidents that happen during or after treatment, such as a customer falling off a table.
Professional liability focuses on the monetary loss from lawsuits that stem from malpractice. If a massage therapist places hot stones on a customer’s skin that result in burns, professional liability insurance would cover most if not all of the legal fees.
Finally, a BOP offers protection for any equipment and assets a massage therapist has invested in. If an expensive massage table is stolen, for example, they would be covered and quickly get their business back up and running.
Liabilities for Hairstylists
At first glance, working as a hairstylist may seem relatively void of liabilities. But when you look closer, there’s quite a bit that can go wrong.
“Chemicals in dyes, sharp cutting tools, and heat from styling tools can all injure a client, even if you’re careful,” writes Beauty and Bodywork Insurance, a company that offers liability insurance to professionals and students. “In all of these situations, you could be liable for a variety of expenses, including medical bills, repairs, and legal fees.”
And like the two other careers we mentioned, there’s always the threat of theft or damage to equipment, as well as property damage. According to The Salon Business, a company that offers marketing solutions to the hairstylist industry, there are quite a few costs involved when purchasing equipment. For instance, a salon chair and accessories typically cost $750, a hood dryer costs $600 and an electronic hair styling and grooming equipment costs $300.
If a hairstylist has to buy these items all over again out of pocket due to theft or vandalism, it could be a major financial hardship.
Coverage for Hairstylists
To ensure they’re fully covered, a hairstylist needs to have general liability insurance and professional liability insurance. The former will help protect against claims due to bodily injury, such as if a customer hits their head on a porcelain sink while having their hair shampooed and needs to go to the emergency room says Hiscox Business Insurance.
The latter covers any accidents or instances of malpractice. Say for example, they leave a hair coloring treatment on for too long and it results in scalp burns and hair damage. If the customer sues for bodily injury or emotional distress, professional liability insurance should cover the hairstylist.
Besides that, a BOP will offer coverage for their equipment if it’s stolen or damaged, as well as any damage to their property.
The Common Insurance Needs of Home Businesses
Examining these three professions shows there’s a clear overlap in terms of the insurance needs of home businesses. When you break it all down, home business owners mainly require coverage for bodily injury to customers (or in the case of dog sitters, a customer’s dog) and coverage for damage to their property or the theft of the contents within it, writes Kimberlee Leonard at Fit Small Business.
As a result, general liability insurance, professional liability insurance and a BOP should be top priorities for home-based businesses in general. Purchasing these types of policies tends to be a good starting point and should cover most of the bases. Small business owners will obviously want to explore additional coverage — like animal bailee coverage for dog sitters, for example — but these three policies should provide fairly solid protection.
Run a Home Business with Peace of Mind
Regardless of the industry, there are a lot of uncertainties that come along with running a home business. While the specific risks will vary, there’s a basic template these business owners can follow when seeking insurance coverage. Doing so should provide them with peace of mind while running their business and minimize the potential for any catastrophes crippling their operations.
As their independent insurance agent, you can point home business owners to the types of coverage they need and help them find the best policies for their unique situation.
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