Homeowners Policy Endorsement – Maximizing Your Risk Residue Building Protection
When it comes to home business insurance, there is no “one size fits all.” The insurance industry has established its rules for coverages, limits and exclusions and what it means when those rules are violated can vary from state to state. There are some basic, industry-wide guidelines that, when followed, will reduce the risk of loss and damage for home businesses, but often the individual business owner must work out an appropriate plan on their own. Here are some tips for finding the best coverage at the most competitive rates…
Tip: Whether your home-based businesses are large or small, you need to talk with your current homeowner’s insurance company about whether they provide a home business insurance endorsement to help cover additional home businesses. In many instances, a home business insurance endorsement on your homeowner’s insurance policy is an easy, affordable way to expand your coverage to include additional home offices, rental units, workshops or art studios. Many companies offer such endorsements and many agents and brokers can help you find one. In general, these types of policies will exclude coverage for physical damage to autos and vehicles and also loss of use. However, limited home business coverage provides protection in those areas where you might need it most.
Tip: Contact your state insurance department and ask them what information they would recommend as a starting point for your home business insurance research. Some states require businesses to be self-employed, others do not. For the sake of uniformity, the national information institute would recommend starting with the guidelines offered by most states. You can then obtain quotes from the national information institute and from a local information institute.
Tip: A number of states, including Illinois and New Jersey, allow home-based businesses to be categorized as either sole proprietorships, partnerships or corporations. The classification of your home business will impact the type of insurance you need to purchase. For example, if you want to be categorized as a corporation, your businesses’ assets and liabilities will be protected from lawsuits. On the other hand, if you wish to be classified as a sole proprietorship, your assets and liabilities are only protected to the extent of your partnership or corporation. As a home-based, start-up businesses are usually too small to have adequate protection from lawsuits.
Tip: Contact a local insurance agent to discuss your home business insurance coverage needs. These agents often have experience working with both local and national businesses to find the best policy limits and premiums for the customers’ needs. They can also provide you with information about which homeowners policies can be ignored for tax purposes and which ones you need to carry.
Tip: Be sure that your home businesses may carry enough coverage to keep you out of trouble. If you run multiple locations, your home business insurance coverage should provide coverage from all of them. Also, make sure you find out what types of coverage your policy provides for business interruption. Some home business insurance policies will pay your creditors if you are unable to operate your business because of fire or other natural disasters. Other home business insurance policies will provide you with emergency cash to continue operating while you receive medical treatment.
Tip: Businesses often use computer and other business equipment to conduct their business. Many insurance covers will not cover the complete replacement cost of your computer or other expensive business equipment. If you have insured your computer with an insurance policy, the coverage usually will pay you for the estimated value of your equipment. Your coverage may also pay you for the total cost of the repair or replacement of your equipment.
Tip: Consider carrying more than one type of home business insurance policy. Many homeowners’ policy endorsements will cover you for liability, loss of business property, and liability for bodily injury or damage to others. In addition, carrying more than one liability policy endorsement is usually a good idea. When you have two or more separate policies that cover different risks, your premiums will be lower. However, if you are a single owner with one automobile and one job, you may not want to carry more than one home-based business insurance policy.