In the past few decades a variety of technological advances have allowed millions of people to branch out into their own home-based businesses. In the past, if you wanted to have many kinds of businesses you needed to rent an office, put in a telephone, buy some yellow pages ads, and then wait for the phone to ring. Now, you can buy a website, get a laptop computer, and a cell phone and you can then work from home, answer calls from anywhere and anytime to make the sale. People are now free to never have the expense of an office and websites are far cheaper than some yellow page ads while being more effective. However, it does raise the question of whether your homeowner’s insurance would cover your home office if it was robbed, burned in a fire, or ruined in some kind of catastrophic event. Here are some tips on getting your home-based business covered for nearly all kinds of risks.
Most Business Losses Will Be Excluded On A Homeowners Policy
The reasons are clear, insurance companies sharpen their pencils in order to cover homeowners from fires, hurricanes, theft, vandalism, liability, and many other losses in order to compete with other companies. If they get a lot of losses for business pursuits, they’ll have to raise their rates, become uncompetitive, and then lose a ton of their customers. So, they have to exclude business property in your home, and business liability for the business owners.
There are millions of small business owners in today’s marketplace that have no insurance coverage at all, some of them know it, while others have no idea. If they’re doing fingernails, cutting hair, making chairs, or selling soap, they are at risk of a wide variety of problems. Even something as small as a deliveryman slipping on the front porch while picking up a package could result in a huge lawsuit with thousands in attorney’s fees, medical bills, and punitive damages too.
You Can Get A Small Business Rider Added To Your Homeowners Policy
Depending of the type of business you have and the insurance company that covers your home, there is what is called a Small Business Rider that can be added to the standard policy. Its not available by itself, only as an add-on, or rider, to a larger policy. In most cases, it’s not very expensive and it covers the small business person quite well.
First of all, it will cover the tools and equipment that you use in your business for fire and theft just like it does your other personal property. In addition to that, it will also cover those same tools, equipment, and other items away from your home as well. If you go to a weekend market to set up a booth or enter a home improvement show at the convention center, your property will be covered.
Another important part of the Small Business Rider is going to be the Procom Insurance Liability options. Many people forget about how important liability is until they get sued for hundreds of thousands of dollars for some small mistake they’ve made or maybe didn’t make at all. There are people that like to sue businesses since they believe, falsely, that there is money to be had in court. So, any slip and fall, broken product that causes injury, or edible that makes them sick, and they’ll be down at an attorney’s office filing a claim.
If you have liability insurance, one that covers your business, then that will cover the cost of defending you in court against a lawsuit, whether it’s frivolous or has merit. Then, if you do lose the case, they will pay up to the limits of the policy the amount you owe. It could be hundreds of thousands of dollars depending on the injury and circumstances involved.
Personal Property Versus Business Property
This can be a problem when it comes to many kinds of tools and office equipment as well. Many contractors have thousands of dollars of tools that they use daily or weekly in their business and also at home when needed. If the insurance company knows that you’re a contractor and those tools get stolen from your truck at a job, they won’t be covered on your homeowner’s policy. However, if they’re stolen from your home, they still might call them business property and deny the claim, or maybe cover them at 50% of their value if they decide you use them half of the time for work.
On the other hand, if you have the small business rider on your homeowner’s policy, they’ll be fully covered up to your policy limits. You’ll always want to be fully truthful as to the number of tools you have in order to get them fully covered in a loss. In most cases, adding extra coverage is only a few dollars more per year.
With the home-based office workers which would include telemarketers, secretaries, transcriptionists, and online marketers, they also can run the risk of not having their computers covered at 100%. The problems can sometimes arise when the computers have special software programs that cost hundreds or even thousands of dollars and it’s only used in the business. The extension to add on the insurance is so inexpensive, compared to the losses that could happen, it’s a no-brainer to get the coverage.
Repair people are at special risks because they have items that belong to others. This is usually called Property of Others Coverage and would apply to a lawnmower repairman, jewelry repair person, or even an auto mechanic, that has items belonging to other people on their premises being repaired. If a fire, windstorm, or theft occurred, the standard homeowner’s policy won’t cover the property of other people but with the rider for small businesses, they can be. It would be important for the insurance agent to know how much the items being repaired are usually worth, both individually and all together, in order to make sure there was enough coverage no matter what the catastrophe.
If you have a small business and so far you’ve been running without insurance, you’re not alone. However, as each day goes by, you dodge a bullet that is sure to come home to roost eventually. The cost per year is usually very small compared to the added coverage you get and the peace of mind you’ll receive is priceless.