Tue 24 January 2017
Sources for Home Business Insurance
You can choose from several sources for home-business insurance in Renters insurance virginia . Most
home business owners, at a significant risk to them, mix and match. You
may be getting your property, liability, and workers’ compensation insurance
through your insurance agent. Your professional liability insurance may
come from an association that you’re a member of. Your product liability
insurance may come from your franchiser. And your life, health, and disability
may come from a second insurance agent. I cover the pros and cons of
each source in this section.
Having an expert agent who serves as your personal risk manager is by far and
away the best choice for you. You’re considerably less likely to get caught in a
major claim that isn’t covered properly. If that’s not available to you, your
next best choice is to work with as few agents as possible — again for the
Homeowner’s business endorsements
As a general rule, homeowner’s policy endorsements are inadequate for most
home businesses — they typically cover only sole proprietorships and often
can’t cover an incorporated business. They can provide on-premises liability
coverages, but few provide off-premises liability, products liability, or several
other kinds of business liability covered in this chapter. Homeowner’s policy
endorsements can cover business property at home, but most don’t offer
much coverage away from home.In my experience, most homeowner’s home-business
endorsements provide incomplete coverage, full of gaps.
A home-business endorsement is often a great idea for employees of companies
who do a lot of their work at home. If this is your situation, you’ll be glad
to know that the endorsement typically does a good job of covering your two
✓ Liability coverage for people getting injured on their premises making
✓ Personal property coverage on your home office furniture and equipment
See Chapter 11 for more information on how to protect yourself if you’re
someone else’s employee but you do some work from home.
Business owners’ policies
A business owner’s policy is my recommended insurance policy for the majority
of home businesses. Business owner’s policies are reasonably priced --
starting at about $500 per year. (As of this writing, a few policies were even
available for as little as $300 a year!)
The great thing about business owners’ policies is that they’re designed for
small businesses. Most of the property and liability coverages you’ll need
as a home-business owner are either included automatically or available for
a nominal extra charge. I always prefer business owner’s policies to homeowner’s
home-business endorsements — you get far better coverage for not
much more money.
Not all home businesses, however, qualify for a business owner’s policy.
Insurance companies differ greatly as to what kinds of home businesses they
will insure under a business owner’s policy. Some insurers restrict eligibility
to offices and small retail stores; others are willing to insure nearly every
type of home business, including building contractors, software developers,
Web site designers, and franchises like Amway or Mary Kay.
If you’re told your business won’t qualify for a business owner’s policy, you
can still get your business insured under a more expensive commercial insurance
policy. But before you shell out the extra cash, check around with other
insurance companies — your business may easily qualify for a business owner’s
policy somewhere else.
Insurance from franchisers
environmental products, cosmetics, or anything else — you can get some of
your insurance through the franchiser. Franchisers offer franchisees (that’s
you!) two major advantages with their insurance programs:
✓ A great price for what they offer
✓ Access to specialty coverages that would be hard for you to find
But they also have two major disadvantages:
✓ The coverage is often not comprehensive for the franchisee. Usually a
number of holes exist in the coverage. I’ve found large coverage gaps in
every one of these policies that I’ve reviewed.
✓ You don’t get any professional advice to help you set up the right
coverage for your particular needs. Having expert advice is extremely
important when buying any insurance, especially business insurance.
Finally, most franchisees buying the coverage believe that if the franchiser
is offering them the coverage, it must be wonderful — and I’ve never found
that to be completely true. For the coverages that you’re offered, the price is
great. But if you work with a good insurance adviser locally who acts as your
risk manager, you can get the expert help you need to overcome both the disadvantages
I outline and supplement the franchise insurance program with
the other insurance coverages you’ll need. You can end up with both a comprehensive
plan and a very good price, if you have good professional help.
If you’re considering getting involved in a franchise, I recommend that you
first gather all the contracts you will be required to sign, as well as a detailed
summary of the different insurances available from the franchiser, and take
them to the insurance professional you’ve chosen to be your risk manager.
She’ll help you identify the hidden risks of the contracts and the insurance
gaps in the program the franchiser is offering and help you design strategies
to avoid both.
Professionals in a particular trade often band together to form associations.
Benefits of belonging include access to information, the chance to network
with others in your field, ongoing education, lobbying power, and the availability of insurance (which is discounted because of mass purchasing
power). For example, the Freelancers Union (www.freelancersunion.org)
and Avant Guild (www.mediabistro.com/avantguild) both offer group
insurance for their members, and many other associations and unions do the
same thing. Look for one related to your line of work.
Associations are also often a good place to buy professional liability insurance
at up to 50 percent off market rates. They’re also a good place to buy
specialty coverages unique to a particular industry that are unavailable or
quite expensive in the open market, such as insurance protection against
unintentional alleged sexual or physical abuse of children (necessary if you
operate a daycare, for example).
Chambers of commerce
If you’re a home-business owner and you don’t have the leverage to get great
pricing on your own, your local Chamber of Commerce may be a good source
for small-business group insurance — life, health, and disability products, in
particular. Often the annual cost of chamber membership is returned many
times over in premium savings on chamber insurance programs.