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Don’t Risk It All
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.