THE CIRCLE OF SAFETY: HOW TO PROTECT YOUR IN-HOME BUSINESS

THE CIRCLE OF SAFETY: HOW TO PROTECT
YOUR IN-HOME BUSINESS

Everyone with – or considering – an in-home business must read this report!
Make sure that you and your business are getting the right protection!

f you are not working at home yet, you may be soon. For more and more Americans, their
"commute" to work is from the kitchen or living room to the den or study. By some estimates,
I there are as many as 18 million home-based businesses in the United States, and that number
is expected to grow rapidly.
? Fact. Unfortunately, many of these home-based businesses, perhaps even most, do not have
adequate insurance coverage. One study found that 60% of those who work at home may not
have insurance for their business activities.
The study also found that most of those without business-specific insurance believe they are
protected by their homeowners insurance. Actually, a homeowners policy does offer some
coverage for home-based business, but it is minimal. Most homeowners policies provide a
maximum of $2,500 coverage for business equipment (computers, fax machines, etc.) in the
home.
If that sounds like it's enough, it probably isn't. If you are sued because of your home-based
business activities -- the company that hired you as a consultant believes your advice was dead
wrong; the computer equipment you "fixed" doesn't work; the cookies you baked made someone
ill -- your homeowners policy won't protect you.
Further, if you have to temporarily shut down your business for whatever reason, the
homeowners policy won't allow you to recover the income you lost because of the shutdown.
There are insurance policies available to home-based businesses that do provide these coverages.
Important Question: What’s the Scope of Your Business
Some home-based businesses don't need much insurance beyond a homeowners policy,
particularly those businesses that have minimal equipment, don't have visitors, don't often visit
clients or offer fairly straightforward products. It is possible to add coverage to your
homeowners policy for your business.
? Tip. Often, for as little as $14 a year, you can double the limit of coverage for business
equipment from $2,500 to $5,000.
? Note. But be aware that these additional coverages, known as endorsements, don't protect
you if you are sued as a result of your business activities. Also, the endorsements usually don't
cover income lost. Some insurance professionals strongly believe that business-related
endorsements to homeowners policies aren't a good idea for any home-based operation.
One fairly inexpensive option for home-based business owners is a home office policy, also
known as an in-home business policy. The policy provides the standard
coverages for
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homeowners -- including fire, theft and personal liability -- as well as coverages for business
property, commercial liability and loss of income.
? Tip. Often, for about $200 a year, you can purchase a policy that offers $10,000 of coverage
for business property. Also, you can buy business liability coverage with limits of $300,000 to $1
million. (If this sounds like a lot of coverage, it really isn't. Most people with any significant
amount of assets carry liability limits of at least $300,000 on their personal auto policies.)
In addition, the home office/in-home business policy provides some coverage for loss of valuable
papers and records, accounts receivable and business property not located in your home. Also,
you can buy additional coverage for equipment breakdown and theft.
? Note. While the home office policy offers adequate coverage for many in-home businesses, it
is not the best option, or even a prudent option, if you conduct a large amount of your business
away from your home.
The most extensive coverage for home-based businesses is available in a business owner’s
policy, which insurance people call a BOP. If you stock a lot of inventory, manufacture fairly
complex products or provide professional services where there is a significant risk of being sued
by disgruntled customers, a BOP probably is the best option.
Depending on the limits of coverage you need for property and liability, BOP’s can cost
anywhere from $150 to more than $1,000 annually.
? Tip. No matter what type of coverage you choose -- whether it's an endorsement to your
homeowners policy, a home office/in-home business policy or a BOP -- you and your agent
should evaluate on a regular basis, at least once a year, whether your insurance is adequate. As
your business grows, it's quite possible it will outgrow your insurance coverage. The bigger your
business, the higher limits of property and liability coverage you need.



Be a smart consumer...but don’t try to be your “own agent.” Protection for you
and your family requires constantly vigilance....and a partnership between you and
your professional agent. For the latest information on how to save money AND
get the best protection for yourself and the people you care most about call Sav-on
Insurance Agencies at 1-888-867-2688.

© 2000, The reader assumes all responsibilities for his/her own actions in regards to any items discussed in this report. Adherence to all
applicable laws and regulations, federal, state and local, governing the use of any product or service described in this report in the US or any other
jurisdiction is the sole responsibility of the reader. The publisher and author assume no responsibility or liability whatsoever on the behalf of the
reader of these materials. The reader is encouraged to consult directly with his/her insurance professional.

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