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Don’t Risk It All

Saturday, November 01, 2008
By Mark Landsbaum

Not having the proper home office insurance — or underinsuring your home-based business — can put you at a big risk. Here are some categories of insurance to consider.

General Insurance
Homeowner/renter – Some companies exclude home-based businesses from these policies. Others sell riders for business equipment, supplies and even inventory. Coverage can be denied for incorporated businesses or if you have employees or on-site inventory. Find out what isn’t covered. Then fill the gaps.

Earthquake/flood – This coverage usually isn’t included in homeowners’ or renters’ policies. If you live in a flood basin or earthquake country, add appropriate coverage for assets at risk.

BOP – A business owner’s policy (BOP) is an alternative to a homeowners’ or renters’ policy. Not all companies selling those policies sell BOPs. You may need to shop around. A BOP can cover your building, equipment and inventory, and pay expenses if you must temporarily cease operation. Casualty or liability protection may be included as well as losses from burglaries or robberies and even employee embezzlement.

Specific Insurance
Contents – Some homeowners’ and renters’ policies cover home office contents. If yours doesn’t, consider a rider or a separate policy for your industrial strength copier or inventory that’s too costly to replace out of pocket.

Liability – If a delivery man breaks his ankle tripping on your throw rug or a child tumbles off your daycare jungle gym, you can be liable. Homeowners’ or renters’ policies may exclude business-related injuries. If so, separate liability coverage is necessary.

Libel – If your business involves commenting on others, as a freelance writer or product reviewer might, you may need coverage for libel, a false publication damaging another’s reputation. Some homeowners’ policies provide libel coverage. If yours does, find out how much. If not, you might want to consider a policy tailored to your unique, potential hazards.

Internet liability – This coverage protects you against infringing on copyrights or trademarks, invading another’s privacy or improperly revealing confidential information. Something as innocuous as passing on a computer virus might expose you to liability.

Workers’ compensation – Many jurisdictions require employers to provide this coverage for on-the-job injuries to employees. It’s not required for independent contractors.

Vehicle – If your personal vehicle doubles as the company car, find out whether business use affects your premium or coverage. Also, determine whether business equipment, such as a laptop computer, is covered if stolen out of the car.

Equipment – Some vendors offer extended hardware warranties. It can be pricey, but coverage could provide total replacement value should you drop your laptop in the swimming pool. However, many electronic devices are so inexpensive it renders the warranty premium superfluous.

Insurance Tips
There are ways to reduce your insurance premiums.

Ask for substantial deductibles, essentially self-insuring to the point that coverage kicks in. Large deductibles, which won’t be paid if you don’t suffer a loss, can substantially lower premiums.

Bundle your insurance policies with one insurer. You can often receive discounts on premiums by getting all of your coverage from a single source.


Writer and author Mark Landsbaum maintains a home office in California.

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