Insurance Issues For Home Based Businesses

Don’t Depend on Your Homeowner’s Insurance to Protect Your Business
Property insurance covers your stuff – desks, chairs, inventory, computers, etc. Liability coverage protects you against a lawsuit if someone is hurt either while visiting you or due to a defect in your product. In general, personal policies just don’t do the job for a business.

Many homeowner policies provide only $2,500 of business personal property coverage at your house and $250 away from your premises. Buildings not attached to your home (a separate garage) that are used in your business are also not covered by most homeowner insurance policies.

Business liability incidents are also excluded by most home policies. Personal umbrella insurance offers no business coverage either.

When I started my consulting practice, I bought a business owner’s policy to cover my home office. You may need to do the same. Talk with your insurance advisor about your options.

Auto Insurance
Many home business owners are adequately covered by a personal auto policy. If you make deliveries or use a pickup or van, you may need to buy a commercial auto policy. Talk with your insurance agent.

Renting Cars
Buy the offered coverage when renting a car from Hertz, Avis, or other short-term rental companies. Their contracts make claims a nightmare, and include obligations not normally covered by standard auto insurance. One option may be using a credit card that provides collision damage waiver coverage as a cardholder benefit. Call the toll-free number on the back of your card to check.

Workers’ Compensation
Most states require workers’ compensation coverage if you have any employees. You also may be able to buy work comp on yourself as a way to have some protection if you can’t find health or disability insurance. Talk with your agent.

Consider Professional Liability Insurance
If you’re a consultant, architect, real estate agent, or other professional giving advice, consider coverage for claims against you for errors or omissions. Professional liability is also known as malpractice insurance. It protects you from suits alleging your advice cost your customer or client money.

Pick Your Agent Well
Find an agent you feel is interested in your business. Get recommendations from your peers and friends. Select your insurance advisor in the same way you would choose an attorney or accountant. Use one agent for all your business and personal insurance. Meet at least once a year to discuss your needs.