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Protecting Your Home-Based Business

2013-07-31
By: Advocate Brokerage

By Glenn Binday

If you run a business out of your home, or even have a home office to use when you’re not at the regular office, you need to think about insurance.

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A normal homeowners policy is very limited when it comes to covering a home office, often insuring equipment and supplies, etc., for a barely adequate $2,500. That might cover your computer equipment if it isn’t too fancy, but forget about your homeowners policy covering loss of data, business interruptions or a client’s slip-and-fall on your shiny hardwood floors.

The number of home-based businesses has grown over recent years as the Internet and mobile communications has greatly facilitated contact with clients, colleagues and remote computer systems.

Today, a graphic designer or architect in solo practice can be just as in touch from the house as from a commercial office – and do it while still wearing his or her PJs.

But suppose you have a home practice of some sort and your clients come by for meetings, appointments or to view prototypes and proposals. You are liable for what happens to them on your property, and a regular homeowners policy most likely would exclude coverage for something that occurs in the course of your business.  You could be on the hook for an unpleasant medical bill if a business visitor sustains an injury.

Even if there are no physical visitors, home businesses such as Web page design frequently have hefty computer requirements– maybe a couple of expensive iMacs, laptops and tablets, a high-end printer, a backup server and more.  $2,500 in office equipment coverage under your homeowners policy isn’t going to touch that.

Internet or eBay marketers might have a house full of inventory; a salesperson a garage full of samples; a boutique seamstress a soon-to-be-bride’s one-of-a-kind wedding gown.

Just as a bridal gown is not one size fits all, insuring for all these different circumstances is not.  In some cases, the home office might be a very simple place to do work and if it is without customer foot traffic, the homeowners coverage might suffice, though sometimes an add-on rider will be necessary.  Your agent at Advocate Brokerage can advise you.

There is also specialty insurance called an in-home business policy that can be tailored to cover extra equipment, some level of visitors, and a moderate amount of inventory or supplies.

If you have a substantial or growing in-home business, with employees, multiple work stations, extra parking for clients, etc., you’re in the big time and need a regular business owner’s policy, just as you would buy to cover a retail space or office in a commercial building. Be sure to tell your broker all that is going on with your home business to ensure adequate coverage.

Your friends at Advocate Brokerage can help you add a rider to your homeowners or secure that in-home business policy, and will be happy to advise you if you need to start thinking like a Fortune 500 rather than a mom-and-pop.

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