Should home business have separate insurance?

More than 43 million Americans operate full or part-time businesses from their homes. This growing trend continues as technology gradually reduces the need for and/or size of separate facilities for many types of enterprises.

Along with shedding leases, commuting, and other costs of “conventional” business operations, many home-based entrepreneurs also assume their homeowner's insurance policy provides them with adequate coverage and protection.

 This is not always the case. According to the Independent Insurance Agents and Brokers of America, Inc., homeowner's policies were never intended to cover business exposures. Typically, these policies limit insurance coverage for items used in the business (e.g., computers, fax machines, filing cabinets, tools and inventory, etc.) to $2,500 within your home and $250 when away from home.

 What's more, a homeowner's policy typically provides no liability insurance for your home-based business. It most likely does not provide business interruption protection in the event that a fire, major storm, or other disastrous event causes your business to cease operations temporarily or permanently.

Fortunately, home-based businesses have several options for bridging existing insurance gaps. They include:

• Incidental Business Endorsement: Depending on your business, you may be able to attach this endorsement to your existing homeowner's policy to cover on-premises structures or equipment that you use for business. This endorsement can also be tailored to include business liability.

• Business Owners Package Policy: If your in-home business does not qualify for an incidental business endorsement, you can purchase coverage under a business owner's package policy (BOP), which provides property and liability coverage.

• In-Home Business Owners Policy: Some insurance companies offer policies that combine homeowners and business owner's coverage into a single policy that provides both business coverage (business liability, replacement of lost income) and homeowner's coverage for fire, theft, and personal liability. These policies eliminate gaps and duplications in coverage, and the rates reflect the in-home status of your business.

• Vehicle Policy: If you have a personal vehicle that is sometimes used for business, or if your in-home business is the owner of one or more vehicles, you may need to purchase a personal or commercial automobile policy.  

An independent insurance agent can help identify risk areas and provide guidance for finding the appropriate coverage to protect your business, as well as you and your family. More information is also available at www.independentagent.com or www.trustedchoice.com. 

• Fox Valley SCORE provides free confidential mentoring to clients in 17 locations throughout DeKalb, DuPage, Kane, Kendall, McHenry and Will counties. If you need help with existing business challenges, or are thinking about starting a new business, visit our website at http://foxvalley.score.org/