Is Your Home Business At Risk?
 By Alex R. Merriman

Your home-based business could be hit by neighborhood burglars or by a natural disaster.

And chances are, you’re not covered for the all of the losses.

A 2004 survey commission by the Independent Insurance Agents & Brokers of America (IIABA) found that nearly 60 percent of home-based businesses didn’t have insurance coverage.

When asked about the lack of insurance, nearly 30 percent said that their businesses were too small to insure. Almost 40 percent of these business owners said that they thought they were protected by some other type of coverage, such as a homeowners’ policy.

Wrong on both counts.

Adequate insurance coverage can protect business owners from losses that can devastate a home business. No matter what your income, no matter how small your business, you need to insure your business.

Types Of Insurance
To properly protect your home business, you need at least:

• Insurance for vehicles you use in your business

• Property insurance to cover business equipment, furniture and/or inventory in case of fire, theft or natural disaster

• General liability coverage to protect you if a client or supplier gets injured while visiting your home business

• Insurance to cover loss of income if your business is unable to operate because of damage to your home office

Unfortunately, homeowners’ policies don’t fill all insurance needs for home-based businesses. Most cover only about $2,500 worth of business property and exclude any property taken off your premises, such as notebook computers or tools you use in your trade.

The easiest and least expensive insurance option is purchasing an endorsement to your homeowners’ policy. The endorsement broadens your existing property coverage to include limited coverage of business assets. For home businesses with minimal assets and few or no clients visiting the office, this type of coverage may be adequate.

The next step up is an in-home business policy. These types of policies generally offer:

• Higher level of business property coverage than a homeowners’ policy

• Liability coverage

• Protection against loss of income

• Coverage for loss of valuable records

For even more protection, consider a business owner’s policy (BOP). A BOP offers coverage similar to an in-home business policy. But BOP coverage is much broader.

Depending upon your type of home business, you may also need special coverage. Some examples:

• Product liability insurance to protect against claims that arise from the use of a product you produce

• Professional liability coverage (also known as errors and omission or E&O) for service providers such as attorneys and accountants

• Workers’ compensation policy if you have employees working in your home office

Cover Yourself
Make sure you’re covered by insurance if disaster strikes. AFS can help. Check out these three benefits.

1. Home Office Protection
Home Office Protection is provided at no extra charge to Premier Resource Members of AFS. You’re protected in case of fire and lightning, theft and burglary, ice and snow, as well as other events.

• $7,500 worth of equipment

• $20,000 worth of business liability coverage at your residence

• $1,500 for temporary relocation of your home business

2. Business Insurance
Through AFS, you have access to protection for your business assets.

• Replace damaged or stolen property

• Provide a stream of income if your business is temporarily closed due to a covered loss

• Protect you if a claim is made against you for bodily injury or property damage alleged to have been caused by your business operations or products

3. Professional Errors & Omissions Liability Coverage
Your AFS membership provides access to a variety of insurance companies that offer E&O liability coverage. This coverage can protect your business with exclusive liability coverage for any act, error or omission that arises from your professional service in the event of litigation.

• Annual limits ranging from $100,000 to $1 million for any one loss and in the aggregate (including costs and expenses)

• Average minimum deductible of $2,500

• Affordable premiums based on your profession

(Posted April 2007)

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