Insurance
Understanding and Covering Your Risks
It is critical to evaluate the risks associated with operating
any business including one that is home-based. Take the time to
carefully determine the risks associated with your specific business
as well as the coverage you may already have. Do not assume that
your homeowner's policy covers your home-based business. Check
your homeowner's policy to understand the type and level of coverage
you may already have. Many insurance companies have modified their
homeowner's policies, increasing the limits and broadening the
coverage related to home-based business. On the other hand, some
homeowner's policies are actually voided if the homeowner operates
a business from home.
A part of your assessment needs to consider the insurance coverage
that may be available from a variety of sources. What coverage
might be available through a spouse's employer, professional trade
associations, alumni associations or the chamber of commerce.
While entrepreneurs are often risk-takers, a wise businessperson
realizes that some risks are not worth taking. Insurance provides
a vehicle for handling much of your business risk. Complete the
following table to determine the specific risks you are assuming
as a home-based entrepreneur.
|
Risk
|
Question
|
Your Situation
|
| Automobile Liability |
Do you use your automobile in the operation of your business?
Your personal automobile insurance coverage may not extend to
using the vehicle for business purposes. |
|
| Liability |
Do business related visitors (clients, deliverymen, etc.)
come to your home office? Do you ever conduct business on someone
else's property? Do you work with clients' property in your
office? Could you have an accident and cause damage to their
property? |
|
| Product Liability |
Does the product you produce or sell make you vulnerable to
product liability claims? Do you run any risk of someone being
injured or suffering ill effects from the use of your product? |
|
| Professional Liability |
Does the service you offer make you vulnerable to professional
liability claims? Do you need protections should the service
you offer cause injury or loss to your client? |
|
| Business Property |
What is the value of your business equipment? How much would
it cost to replace it? |
|
| Computer |
Do you have risks related to your computer hardware/software/data
that are not adequately covered through your small business
or property insurance? |
|
| Transportation Loss |
Is your product transported to customers? Could it get lost
or damaged during transport? |
|
| Disability |
If you were not able to operate your business for a period
of time due to illness or injury, how much revenue would you
lose? |
|
| Business Interruption |
If you had to shut down your business temporarily due to circumstances
such as fire, flood or theft, how much revenue would you lose? |
|
| Health |
Do you have health insurance coverage? |
|
| Life |
Do you have adequate life insurance coverage? |
|
If "Your Situation" reveals any areas of risk, discuss those concerns
with an insurance agent/broker experienced in working with small
business policies.
For more specific information, visit the Health
Insurance and Property and Liability
Insurance sections.
|
