Your Home Business Needs Insurance Protection

If you operate abusiness from your home, it's important that you obtain adequateinsurance for it, just as if you had a separate office. Even a smallhome business deserves full protection against calamity. Mostimportant, never rely exclusively on your normal homeowner's policy. Ifyou do, bad things can happen:

• After your computer is stolen, you may find out that it's not covered by your homeowner's policy because business property is excluded.
• After your house burns down, you may find that the fire coverage is void because you didn't disclose your business use to the insurance company.
• After the UPS delivery person slips on your front porch and breaks his back, you may find you're not covered for injuries associated with business deliveries.

It's easy to avoid these nasty surprises. Sit down with your insuranceagent and fully disclose your planned business operations. It'srelatively inexpensive to add riders to your homeowner's policy tocover normal business risks. You may need separate policies for otherbusiness-related coverage.

When it comes to business equipment and furnishings, figure out howmuch it would cost for replacements after a fire, theft or otherdisaster. Don't overlook things such as the specialized businesssoftware you run on your computer. Depending on the nature of yourbusiness, replacing equipment and furniture could run into manythousands of dollars.

Ask your insurance agent what it takes to insure this valuableproperty, allowing for a good-sized deductible to keep costs down. Makesure that the coverage on equipment and furnishings is for the fullreplacement cost -- not just the depreciated value, as can be the casein some homeowner's policies.

Your homeowner's policy may also not adequately protect you fromliability to business visitors. Accidents -- such as people gettinghurt when they trip and fall -- are more likely to happen at home thanin a well-planned office building. Your homeowner's policy probablyprotects you if you're sued by a social guest or someone at your homefor a non-business purpose -- a florist's truck driver deliveringflowers or the meter reader who's checking on gas usage. But it may notcover a business associate, employee, customer or delivery person whois injured on your property.

Some home-based businesses need special kinds of insurance. If yourender professional services, look into professional liabilityinsurance. If you manufacture, distribute or sell products that mayhurt someone, think about products liability insurance. Also, if youhave employees, you'll need to provide workers' compensation coverage.

If you do some business away from your home, be sure that your carinsurance covers injuries that occur while you're on business errands.And see about the extent of your general liability coverage if youshould accidentally injure someone or damage their property while awayfrom home on business. You may need a rider or special policy to coverthis risk. The Insurance Information Institute reports that manyinsurance companies are offering such riders for less than $200.

Policies to cover both your home and home business

Several insurance companies have developed special policies that coverboth your home and a business run from your home. Typically, thesepolicies cover your computer equipment and other business property --whether used in your house or elsewhere -- and protect you frombusiness liability lawsuits and loss of income.
These policies can be less expensive than either adding riders to yourhome insurance or buying separate policies for home and business. Butcheck the coverage carefully, as these policies tend to primarilyaddress home offices and may not adequately insure you if, for example,you're a small manufacturer or a wholesaler who stores inventory in thebasement.

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