Many home business owners are unaware that their home insurance may not cover their home based business as well. Statistics show that close to 60% of the 18 million home based businesses in the US are knowingly or unknowingly gambling with the future of their businesses. In many cases people just assume that their regular home insurance will extend to cover their home based business as well. Unfortunately, in the world of insurance, of rather in the business of insurance, you've got to inquire about, apply for and pay for extended coverage such as home based business insurance.
It's important to acknowledge that most homeowner policies only cover a loss of business property up to $2500, and many policies will not cover losses away from home. Furthermore regular homeowner insurance does not cover liability coverage for business related activity. When you think about the consequences, you might get your self in gear and look into your policy. Imagine if a client slipped and fell during an appointment at your home based business? You could be in the midst of nasty lawsuit and with no coverage! Or, imagine that the theft of your $15,000 worth in computer equipment. It would be a more than unpleasant surprise to find out that your home insurance will not cover the majority of your losses.
In order to assess the type of insurance you'll need for your home based business, you'll want to ask yourself these pertinent questions: How much inventory do you have, and what would be the total cost of replacement? How many customers do you have, and how often do they come to your home? Would you be able to cope if a disaster forced you and your business out of your home temporarily, or would this be totally out of the question impossible?
There are different types of policies available and you'll want to narrow it down to which one best fits you and your business. Look into different insurers and see what sort of packages they offer. Business owner's policy, home office policy, and a business pursuits endorsement all offer varying levels of property damage coverage and liability insurance.
Home based business owners should also consider taking certain steps beyond insurance to cover themselves:
- Keep office equipment away from the site of passers-by on the street.
- Ensure that fire extinguishers and dead bolt locks are installed.
- Money and important documents should be kept in a fireproof safe.
- Motion-sensitive outside lights should be installed and any debris or potentially hazardous obstacles should be removed.
- Ensure that electrical circuits are never overloaded.
- Have back-up of all important documents and store them at a separate location.
If you're a home based business you'll want to make sure you know the details of your insurance, and don't assume that your homeowners insurance will cover your business as well!
By: Ted Guarnero
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