Americans are scrambling to be more resourceful in a tough economy and more people are finding ways to work from home according to the Insurance Information Institute.
What many Americans don?t know is that home-businesses need to be insured. The Independent Insurance Agents and Brokers of America (IIABA) say that about 60-percent of at home business aren?t sufficiently covered.
A significant reason for this high percentage is that many home business owners don?t know that their business needs coverage. The IIABA study discovered that 30-percent of business owners think their business is too small to be insurable whereas 40-percent think their business is covered by insurance policies they already have- such as homeowner?s insurance.
Home Insurance Doesn?t Always Cover It!
Existing home insurance may cover a fraction of your business. According to the IIABA, if business tools such as high dollar electronic equipment or anything else that is used to earn an income are covered by existing insurance, chances are that the policy will cover around $2,500 of the actual value.
What Else Home Insurance Won?t Cover?
Liability: If you invite customers into your home you?ll want to protect yourself against any injuries sustained by individuals as a result of their visit to your business.
Loss of equipment/records: If your home is leveled by a natural disaster, your home insurance policy will not cover loss of income arising from damage or loss of computers, files, records, or other documentation.
Employee injuries: If you employ one or more individuals, it?s essential for you to offer worker?s compensation coverage. When employees incur injuries at work, you?ll need proper insurance to cover medical costs and your employee?s wages until he or she can work again.
What Coverage Do I Need?
You have two options. Depending on the kind of business you?re running from your home, you?ll either want enhanced coverage under your home insurance or invest in a separate business insurance policy.
When Home Insurance is Adequate?
If your insurer provides a business-specific endorsement that you can add to your existing policy. The Insurance Information Institute says a home-based daycare is a good example of the kind of business eligible for this kind of endorsement. Another reason a home insurance policy might be enough- when business earnings are low enough for the home insurance company to offer liability coverage.
When You Might Want Business Insurance Coverage?
The great thing about business insurance is that providers will customize the policy based on your specific needs. The IIABA says there are special policies that best fit small businesses and home-based businesses.
Benefits of Having an Umbrella over Both
Once you?ve decided on the right home insurance policy or business policy, you might want an umbrella policy on top of what you now have. Umbrellas do for insurance policies what they do in the rain- it places a ?tent? over all of your business assets. This umbrella encompasses your house, business assets (cars, equipment, etc), and more. The IIABA says if one of your clients gets injured on your property and the medical expenses exceed what your current insurance provides; the umbrella will unfold and cover everything else.
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