Do you operate a home-based business? If you do, you may need specific insurance coverages to protect yourself and your business. Simply having a homeowner’s policy isn’t sufficient if you are also a business owner as these are not the same thing.
“Many home-based entrepreneurs incorrectly assume their business assets are covered by personal insurance policies,” says NAIC President Monica Lindeen and Montana Commissioner of Securities and Insurance. “Unfortunately, business owners often don’t discover this mistake until after a major incident puts their business and personal finances at risk. When it comes to insurance, what you don’t know definitely can hurt you.”
If you are working from home in any capacity, consider how these personal insurance policies affect your business:
Home. Homeowner’s or renter’s insurance policies seldom have coverages that are appropriate for a business. In the alternative, owners of home-based businesses will want to get information on a business owner’s policy, general liability insurance, business property insurance, and business interruption/continuation insurance.
Auto. If the vehicle that you are driving is being used in whole or in part for business use, you can list the business as the principal insured on your auto policy. If you have any permanently attached items used for the business, such as a storage unit or generator, you can cover these as well.
Health. Health insurance is much easier for small business owners and the self-employed to acquire than in the past. Now you can investigate ways to purchase a health insurance policy in an HMO, PPO, or EPO through a popular health insurance plan and possibly at discounted group rates. The Patient Protection and Affordable Care Act (ACA) allows business owners and the self-employed who purchase coverage through the new marketplace to claim tax credits on their annual returns.
Life. If your home-based business is also a partnership, you have an insurable interest in the other partner, and vice versa. A key person life insurance policy, which names each partner as the other’s beneficiary, can protect each of your interests in the partnership should the other pass away.
Too many business owners mistakenly believe that they are covered by their homeowners insurance for business that takes place at home. This isn’t the case. If you are sued for doing something wrong in your business and have to defend yourself in court, you would need business insurance to cover your defense. Here is what a home business insurance policy will cover:
- Liability from clients visiting your home on business
- Theft, loss, or damage to equipment or property used by the business
- Liability while on another’s property
- Medical payments coverage if someone is hurt
- Loss of income because of fire or natural disaster
- Company vehicle coverage
- Optional coverage for other securities
Speak with your state department of insurance for more information on the various types of policies available in your area. Some companies, such as The Harford Company, many combine business insurance and business liability into one policy. Others will tailor coverages to your particular needs.
Any business is open to risk, whether home-based or not. It only takes one unhappy customer or one unfortunate injury to threaten your livelihood. Be sure that you are properly protected with the right coverages for you and your business. If you are looking for more information on how to cover your Sarasota home-based business, please contact us.