Doomsday Scenario For Home-Based Businesses Without Insurance

Unemployment figures are soaring and, as a result, more people than ever are either working from home or preparing to work from home. Home-based business types vary widely, but all have one thing in common: they are still businesses and need to be treated as such.From a legal viewpoint, your home-based business is not much different from any other business. You still have to select a business name, choose an appropriate legal structure, collect from customers, and pay taxes.One key item often overlooked in home-based businesses is insurance. People operating home-based businesses commonly fail to consider insurance as being required in addition to their normal homeowner’s policy. Well, this is a mistake that could be devastating to your livelihood. Every business should consider at least the following insurances regardless of whether or not it is home-based.-Property Coverage
This should include coverage of all items that are specifically associated with your business. A good way to separate this is to base it on your tax return. When you file your tax return, you will consider a certain number of square feet of your home as being dedicated to your home-based business. Well, whatever is in this area needs to be covered under a policy in the name of your business. Your homeowner’s policy probably will not cover it.-Liability Insurance
You will need some form of liability insurance coverage, however, the type and amount will depend on your type of business. You may require protection for professional liability, general liability, product liability, vehicle insurance, and workers compensation insurance. Consult your commercial insurance broker for advice on what liability coverage you require.Here are some dooms-day scenarios for home-based businesses that rely solely on standard homeowner’s policies:-Your home is broken into and your computer is and big screen LCD monitor are stolen. This property legally belonged to your business. Guess what, your homeowner’s policy more than likely excludes business property.-God forbid, your home burns down. The fire investigators determine that the cause of the blaze was due to an electrical short from your office. Your insurance company reverts to you with a Dear John Letter telling you that you are on your own. Your policy is null and void due to the fact that you did not disclose your business use to your insurance provider.-You are a mathematical genius and you slyly discovered a secret algorithm that resulted in you making a cool $500K profit from advertising on Google. The FedEx man delivers your prized check to your door. You rip open the much anticipated parcel and stare at the check with delight. You hug the FedEx man as tears of joy form in your eyes. The befuddled delivery man smiles, shakes his head and walks away. Suddenly, he slips on the steps and breaks his back in the resultant fall. Guess what, your homeowner’s policy excludes injuries associated with business deliveries. You subsequently lose the $500K to the injured delivery man in court.I hope you kept good notes during development of the algorithm.Talk to a commercial insurance specialist and your homeowner’s policy holder to be sure you are covered. If you provide the commercial insurance broker with a copy of your homeowner’s policy he or she will let you know exactly what additional coverage is required to protect your home-based business.

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