If you're an independent agent who focuses on personal lines, you have strong relationships with homeowners in your community. Chances are, many of these homeowners also run small, home-based businesses. This points to a big market opportunity for you as well as a great way to increase retention.

Roughly half of all businesses in the U.S. are home-based, according to 2019 data from the U.S. Small Business Administration. These businesses are often underinsured—or uninsured altogether. That's where a business owners policy comes in. Designed to protect smaller and less complex businesses, BOPs bundle property and liability coverage into a single policy that can be tailored to address clients' specific needs.

Why You Can—And Should—Write BOPs

Though business lines producers are the BOP experts, that doesn't mean personal lines producers can't write them as well. Writing a BOP isn't dissimilar from writing other policies. Just like you learn about your clients' kids, pets and vehicles, you'll want to learn some general information about their business too—like business income, number of employees, business personal property and liability exposure. Once you have this information, most modern quoting systems, plus a trusted underwriter, will help you through the rest.

Your clients will appreciate that you're looking out for them. Plus, you're more likely to retain their business the more policies they have with your agency. Getting comfortable writing BOPs will open up cross-selling opportunities and allow you to bundle more policies, rather than sending that business elsewhere.

In the event that you aren't licensed and appointed to write that business with a carrier, it's useful to have someone in your agency or in another agency you can refer these accounts to—as long as the business fits the BOP bill.

Does a Home Business Client Need Additional Business Coverage?

The first step is understanding some key differences between a homeowners policy, a home-based business endorsement and a BOP. A standard homeowners policy—for example, a Safeco® Home policy—typically only covers up to $3,000 in business equipment and doesn't provide coverage for business general liability or loss of business income. If a client's exposure exceeds this coverage, you'll want to look at a home-based business endorsement or a BOP.

A home-based business endorsement is an add-on to a customer's home insurance policy and offers protection for a small, home-based business with very little property or risk—often a fraction of what a BOP will cover. Personal lines carriers have varying appetites for in-home business and underwriting is pretty strict, so you'll want to review policy offerings carefully. For example, a typical home-based business endorsement might cover up to three employees, up to $25,000 in business personal property and up to $500,000 in general liability, while a typical BOP might cover up to 10 employees, up to $3.5 million in business personal property and up to $1 million in general liability.

Another key difference is that a home-based business endorsement doesn't typically cover loss of business income, employment practices liability insurance or professional liability coverage, while a BOP typically does. For example, if your client has a home-based online clothing boutique and a house fire prevents them from being able to operate their business for a few months, a home-based business endorsement might not cover that loss of income.

Start a conversation with your client to find out whether they may need additional coverage for a home-based business. Remember to keep your questions open-ended to avoid yes or no responses. Here are six useful questions and how they might help you uncover risk:

1) Where do you typically work? If your client runs a computer repair service and damages a customer's computer offsite, a homeowners policy likely wouldn't cover that.

2) Where do you sell your products? A home-based business owner selling crafts at a local farmers market needs coverage to protect those crafts when they're outside the home.

3) Where do you conduct business with customers? An accountant who meets with clients at home needs liability coverage in case there's ever a slip-and-fall accident.

4) What type of property and inventory does your business own? Online retailers who keep thousands of dollars in inventory at home need to protect that inventory from theft.

5) Is your home-based business your primary source of income? A small business owner who operates out of the home could lose income in the event of a fire.

6) What is the end use of the products you sell? Business owners selling electronics may be liable for injury or damages if a faulty product causes a fire or shocks a customer.

Once you have more information from your client, there are many great resources to help you narrow in on the best policy choice. Many carriers offer a variety of trainings on topics like these. Your underwriter is also a great resource to help you determine each client's unique risk profile and product fit.

Seize the Opportunity

With home-based businesses becoming more and more common, you're in a great position to advise clients, grow your book and increase your retention. Asking the right questions will help you understand whether your clients need additional coverage, and knowing the basic policy differences will help you determine the right fit. Now that's a win for everyone!