The ongoing pandemic has forced nation-wide changes in the economic landscape of the United States. Lockdowns stalled earnings, fear of infection drove millions from the labor pool, and working from home grew exponentially. With traditional employment uncertain and inflation rising, thousands of Americans began to look for ways to increase their monthly income without unnecessary exposure. The result: an explosion in home-based businesses.
2020 saw unparalleled growth in new businesses between the second and third quarters. Some took their professional expertise private while many more turned a side-hustle into a primary occupation. Experts now estimate there are as many as 15 million home-based businesses. As these entrepreneurs develop into a larger proportion of the labor force, they must ensure their new assets are protected.
In January, AXIS published results from a survey that polled 1,000 home-based business owners across the United States. The poll showed an impressive spread of fields driven by motivations beyond financial compensation. The results were promising for the future of home-based businesses. However, many of those surveyed had no insurance coverage at all, or were unsure of how they were covered by an existing plan. Why are so many neglecting vital coverage?
Since many of these operations are scaled-up side hustles, they turned into primary revenue streams without the forethought of a business plan. Others may simply not recognize the need for insurance or mistakenly believe that their operation is covered by their private home insurance. Whatever the reason, millions of business owners may be grossly unprotected.
This is where commercial insurance comes in. Small businesses face unique threats that are not covered by normal plans. It is vital that entrepreneurs understand that their home insurance will not protect business risks like liability, defamation, or transit hazards. Theft in an off-site storage facility or cyber attacks can leave small companies severely crippled. All it takes is a competitor posting a few fake disparaging reviews on Google to shut down a small business completely.
Despite the precarious position this leaves home-operators, many still view traditional commercial insurance as a waste of money. Entrepreneurs will be reluctant to purchase insurance that includes unnecessary coverage for traditional brick-and-mortar enterprises. Fortunately, professional advisors can help clients craft custom plans that cover them for what they need without charging them for irrelevant coverage.
Business is booming for home-based professionals. Wise entrepreneurs will protect their hard-earned success with the right type of insurance coverage.
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